The Bangko Sentral ng Pilipinas formally launched the Open Finance Framework and the Open Finance Roadmap 2021-2024 that will strengthen collaboration among banks and those into digital financing to enhance customer experience and reduce the cost of banks on financial transactions.
TO reduce the transaction costs of financial institutions and allow for data sharing for the convenience of banking customers, the Bangko Sentral ng Pilipinas has formally launched the Open Finance Framework, aimed at promoting collaborative partnerships and digital transformation as a key enabler towards economic resilience and financial inclusion.
Open Finance is the extension of data sharing principles, assigning greater control to customers over their own data and enabling them to allow third party providers access to their data across multiple financial products and services.
This can offer both businesses and individuals better financial products and services. It also provides financial institutions the opportunity to reduce their transaction costs, as well as the ability to better tailor their products to the evolving needs of customers, the BSP said in a press release.
“We must fully recognize the breadth and depth of Open Finance as it would entail a wide-ranging scope of activities covering a broader array of financial products and involving multiple stakeholders across the financial sector,” said BSP Assistant Governor Lyn I. Javier.
3-year roadmap
In establishing a more defined program for the implementation of Open Finance in the country, the BSP has adopted the three-year Open Finance Roadmap 2021-2024.
The roadmap outlines priority actions that would require capacity- building, development, and adoption of industry-accepted standards under a test-and-learn approach, and the implementation of a robust and scalable framework that is fundamental to establishing an Open Finance ecosystem.
The members of the Open Finance Oversight Committee Transition Group (OFOC TG), participating financial institutions and third-party providers in the regulatory sandbox, and international partners from the World Bank (WB) and the International Finance Corporation (IFC) joined the BSP in the launch.
“As part of the core team that will drive this Open Finance initiative to impactful and life-changing opportunities for the ordinary Juan and Maria, all of us should mark this event with a sense of duty and responsibility to our nation and countrymen in elevating the level of financial inclusion and at the same time, maintaining the integrity of the entire financial system,” said BSP Deputy Governor Chuchi G. Fonacier.
IFC Country Manager Jean Marc Arbogast delivered the keynote address and highlighted the benefits of Open Finance to the Philippine digital economy.
“Open Finance aims to provide customers with greater choice and control over how they interact with financial institutions. It can lead to deeper and more dynamic markets, in which customers enjoy a better experience, more choices, and better access to a range of financial products and services.”
He added that Open Finance can help accelerate financial inclusion by improving access to credit, improving the tools available for MSMEs to manage day-to-day finances and transactions, and alleviating the lack of digital documentation among Filipinos.
Global network
Arbogast emphasized the continuing support and commitment of WB and IFC. “We will draw on our extensive global network of experience in designing and implementing Open Finance in emerging markets,” he said.
In support to this endeavor, members of the OFOC TG, who are tasked to facilitate the initial policies and standards formulation and support pilot implementations under the Open Finance regulatory sandbox, were also officially recognized. Each member acts as a representative of his/her respective industry (i.e., UKBs, TBs, RBs, Digital Banks, EMI-Others, OPS, and FinTech).
The OFOC TG is expected to carry out its activities for a term of no longer than two (2) years from its inception, or upon the establishment of the OFOC. OFOC TG Members are as follows:
Wide array of products
On a separate occasion, Melchor T. Plabasan, Director of the BSP’s Technology Risk and Innovation Supervision Department (TRISD), highlighted that, Open Finance will enable financial institutions and third parties to develop and offer a wide array of digital financial products that are both responsible and responsive to customers’ evolving needs.”
Primary representative Long Pineda of the Digital Banks welcomed the challenge and added that despite coming from different institutions, their common goal is providing the best customer journey for their clients.
“Our topmost priority is providing customer-centric financial products and services, and with this in mind, I don’t see why we cannot make Open Finance fly,” she said.
This virtual event officially marks the beginning of this transformational endeavor. The BSP has made the firm resolve to be steadfast, persistent, and committed towards the attainment of an Open Finance ecosystem and enjoins everyone to work toward institutionalizing an Open Finance framework that champions collaboration, responsible innovation, and interoperable standards.
Tags: #BSP, #OpenFinanceFramework, #collaboration, #banking