The central bank will release by the second quarter of this year its Open Finance Framework, which will govern the customer-allowed sharing of financial data that is seen to create innovative financial solutions for both customers and financial institutions. In an online press briefing, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said they were refining a draft circular based on comments received from the financial industry. According to the draft issued late last year, “open finance” is the sharing and leveraging of customer-permissioned data among banks, other financial institutions and third-parties to build innovative financial solutions, such as those that provide real-time payments, greater financial transparency options for account holders, marketing and cross-selling opportunities. “Open finance is seen to shape the industry,” Diokno said. “It is part of BSP’s broader efforts to foster financial innovation while safeguarding consumer interests and the stability of the financial system.”
Industry-led
The proposed framework provides for the creation of an Open Finance Oversight Committee, a BSP-recognized, industry-led self-governing body that shall create its own rules for membership, participation, procedures and setting of standards. The draft circular also pursues tiered implementation based on data sensitivity, type and holder. In establishing an open finance ecosystem, the central bank consulted with global subject matter experts, conducted a survey with BSP-supervised financial institutions and completed a comparative study of the regulatory landscape in other jurisdictions. Diokno explained the underlying idea of open finance was the customers’ ownership of their transaction data, which could be shared if they wished to do so.
Information-sharing
Thus, BSP formulates a policy that encourages information-sharing among financial institutions in the course of developing innovative financial services for customers.
Last month, the central bank said it would also draw up a unified policy governing the handling and use of digital data gathered by banks from their clients—a framework that would be in line with international standards.
The proposed framework aims to provide high-level principles and supervisory expectations on financial institutions’ data governance and ethical use of data.“The rise in e-payments during the pandemic provides the BSP with greater impetus to balance its promotion of financial inclusion and digital finance with the need to ensure consumer information security,” Diokno said. “The upcoming policy aims to establish robust infrastructure and data standards amid the broader use of digital payment platforms.”