PH financial regulators eye unified supervision framework for local fintechs
MANILA, Philippines — The country’s financial regulators, led by the Bangko Sentral ng Pilipinas (BSP), have agreed to come up with a unified monitoring and supervision scheme for the local financial technology industry without stifling these firms’ new and creative ideas.
In a statement, the central bank said a memorandum of agreement was recently signed under the auspices of the multi-agency Financial Sector Forum on the establishment of a cooperative oversight framework on fintech innovation.
The framework aims to facilitate seamless regulation and supervision of fintech companies across the financial sector leveraging consultative and collaborative platforms under the agreement.
This will ensure that risks associated with fintech activities will be effectively managed without crimping innovation.
The operationalization of the agreement is also expected to eliminate regulatory overlaps and arbitrage and promote adherence to standards set out in relation to cybersecurity, anti-money laundering and the combatting of financing of terrorism, and consumer protection.
According to BSP Governor Benjamin Diokno, the institutionalization of this system “symbolizes our unity in diversity and reinforces the spirit of shared commitment among financial sector supervisors to espouse an enabling regulatory environment in the digital financial economy.”
The framework will cover all financial institutions performing multiple regulated activities using a single application platform and wherein such activities fall within the regulatory regime of the member agencies.
The agreement’s virtual signing rite was attended by Diokno, Securities and Exchange Commission chair Emilio Aquino, Insurance Commission Commissioner Dennis Funa, and Philippine Deposit Insurance Corporation president and CEO Roberto Tan.
Joining the ceremony as witnesses to the event were BSP Deputy Governor Chuchi Fonacier, SEC Commissioner Ephyro Luis Amatong, IC Deputy Commissioner Erickson Balmes, and PDIC vice president Maria Belinda San Jose.
The initiative jibes with Diokno’s desire to see local fintech firms play a bigger role in the new economy that will emerge from the coronavirus pandemic to include lending money on a retail basis—functions previously the exclusive domain of traditional financial institutions before the Covid-19 crisis.
Diokno believes that these firms — which, at present, concentrate on providing convenient electronic payment channels for retail users — could offer digital solutions for micro, small and medium enterprises wanting to pivot their business models toward e-commerce.
The central bank is aiming to have 50 percent of all retail transactions in the Philippines done digitally by 2023, up from around 20 percent at present. The regulator also wants at least 70 percent of all adult Filipinos to be using digital transaction accounts within this period.