The entry of Chinese technology giants will propel mobile financial services (MFS) in the Philippines, a Fitch Group unit said.

In a report released on Wednesday, Fitch Solutions said looming competition between Tencent Holdings Ltd. and Ant Financial would bolster the local digital economy.

Tencent and US-based private equity firm KKR marked their entry in the Philippines on October 4 following a deal to invest up to $175 million in PLDT’s digital arm Voyager Innovations.

Alibaba-led Ant Financial, meanwhile, has an interest in Globe Telecom’s fintech startup Mynt.

Fitch Solutions said Tencent may start to strengthen its popularity among overseas Filipino workers (OFWs)

residing in China and Hong Kong through a remittance tie-up between its WeChat Pay service and Voyager’s Smart Padala.

It added that while financial inclusion in the country still needed a push as data from the World Bank stated that only 34.5 percent of the adult population had a bank account as of end-2017, technology companies can bank on the increasing smartphone penetration for the adoption of MFS.

Aside from this, Filipinos who still use 2G-compatible feature phones can be the market for basic money remittance services via short messaging services or SMS.

“More significantly, proliferation of MFS will spur credit growth in the Philippines,” it said.

“Tencent’s robust experience in providing microloans and offering credit scoring in China through its WeBank service will be leveraged by both Voyager, which currently connects credit-worthy applicants to loan providers via its Lendr platform,” Fitch Solutions added.

Despite the bright prospects, Tencent has a long way to go to keep up with its Chinese competitor, the Fitch unit said.

Mynt, it noted, will continue to bank on Alibaba’s e-commerce firm Lazada to grow its subscriber base.

However, Fitch Solutions stressed poor mobile connectivity could still be considered as the “largest hurdle” as both Mynt and Voyager’s services are still “used largely outside physical points-of-sale, such as for bill payments and money remittances, which we believe is due to poor network coverage.”