BSP addresses needs of unbanked with ‘open finance’ system
MANILA -The Bangko Sentral ng Pilipinas (BSP) on Wednesday launched the “Open Finance PH Pilot” project, which is intended to help the unbanked build a financial profile and credit history and thus get access to loans and other financial services.
Supported by the International Finance Corp. (IFC) and parent group, the World Bank, the initiative is a voluntary effort of banks and financial institutions that are supervised by the BSP to cooperate in developing an open, interoperable and scalable ecosystem.
Aimed in particular at operators of micro, small and medium-sized enterprises, the project is also meant to empower consumers to take more control over their financial data and enable them to access a range of financial products and services from different providers.
Jean-Marc Arbogast, country manager for IFC Philippines, said the initiative “puts the Philippines on the map” of the global open finance ecosystem.
“It positions the country right alongside more advanced markets like Singapore, the United Kingdom and the European Union, all of whom catalyzed innovation by championing open banking initiatives,” Arbogast said.
According to the BSP, the launch of the pilot starts the next phase of the implementation of the Revised Open Finance Roadmap (2023 to 2027).
Further, the conduct of the pilot is based on the recommendations of a committee that is composed of 19 volunteer financial institutions and financial technology companies tasked to review and recommend pilot processes and standards.
In addition, the results will help craft open finance technical and operational standards and arrangements that may be put in place in the future.
BSP Governor Felipe Medalla said the implementation of Open Finance PH represented a big step toward unlocking equal access to financial services for all Filipinos and building a cyber resilient and open digital economy.
“Enabled by strong partnerships, it’s time for all of us to embody responsible innovation, become leaders in the new era of finance, and write a new playbook for the banking system and the rest of the financial sector—one that truly won’t leave anyone behind,” Medalla said.
The BSP chief said that for banking customers, an open finance ecosystem would provide products and services that better suit their needs, from tailored payment schemes to hyperpersonalized investment recommendations. Also, such an ecosystem provides customers more control over their data, as they will have to give consent before their information is shared.
For banks, financial technology startups and other service providers, the benefit is that they can assess credit risks more efficiently, helping reduce costs and opening up new revenue streams.