UNBANKED Filipinos who lack documentation can now build a financial profile and credit history through the Open Finance PH Pilot officially launched by the Bangko Sentral ng Pilipinas (BSP).
The Open Finance PH Pilot, supported by the International Finance Corporation (IFC) and the World Bank (WB), is a voluntary undertaking of financial institutions to co-develop an open, interoperable and scalable ecosystem that consumers and banks can use for various financial products and services.
The system seeks to empower consumers to take control over their financial data while allowing banks to access information to help them assess credit risk more efficiently and at less cost.
“With Open Finance PH, we are taking a big step towards unlocking equal access to financial services for all Filipinos and building a cyber resilient and open digital economy,” BSP Governor Felipe M. Medalla said.
“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,” he added.
An open finance ecosystem holds immense potential for all stakeholders. For existing bank customers and micro, small and medium enterprises (MSMEs), this opens up a world of products and services that better suit their needs. These include tailored payment schemes to hyper-personalized investment recommendations. This also assigns them more control over their data, as they will have to give consent before their information is shared.
In turn, through Open Finance PH, banks, fintech startups and other third-party providers can assess credit risk more efficiently by reducing costs and opening up new revenue streams. It will be easier to extend the customer lifetime value. An open system will also encourage both industry collaboration and competition; by opening up the market to new players, it aims to inspire everyone to offer more affordable and accessible products and services that better serve the unbanked and underbanked.
IFC has been and will continue advising the BSP throughout the duration of the project, including helping formally establish an industry-driven advisory/consultative body to enlist private sector cooperation, while the World Bank will continue to provide technical assistance in building capacity and consensus across concerned government agencies.
“This puts the Philippines on the map when it comes to open finance,” said Jean-Marc Arbogast, Country Manager for IFC Philippines.
“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.”
To start, eligible BSP-Supervised Financial Institutions (BSFIs) shall participate in the Pilot. This marks the next phase in the implementation of the Revised Open Finance Roadmap (2023-2027) which lays out the updated priority actions of the BSP in the adoption of Open Finance in the country.
The BSP also announced the official start of registration for the Open Finance PH Pilot. This is based on the recommendations of the Open Finance Oversight Committee Transition Group and a subworking group (Standards Consultation Working Group) composed of 19 volunteer financial institutions and fintech companies tasked to review and recommend pilot processes and standards.
Since November 2021, IFC has been working closely with the BSP and leading financial institutions to elevate the level of financial inclusion in the country.
In February 2023, IFC together with BSP and the Bankers Institute of the Philippines (BAIPHIL) organized a workshop on sustainable and innovative MSME lending, focusing on new trends and approaches to reach new segments and increase profitability.
Unbanked pinoys can build profile with ‘Open Finance’
Source: News Paper Radio
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