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Digital transformation to boost financial inclusion in the Philippines

Bangko Sentral ng Pilipinas (BSP) considers the pursuit of financial inclusion through promotion of financial technology (fintech) as among its top agendas.

According to a recent report, BSP Governor Benjamin Diokno shared that they would continue to enhance the regulatory environment to enable fintechs to flourish.

Dealing with digital transformation

They are pursuing inclusion amid a global financial ecosystem, which is in a state of digital transformation.

In doing so, they will be establishing the appropriate safeguards against risks associated.

The central bank is mindful of attendant risks and any unintended consequences that technological innovations may bring, especially when it comes to consumer and data protection.

Further deepening their financial education and consumer protection initiatives are deliberate parts of their strategy to achieve this.

This balanced regulatory approach is anchored on the core principles of risk-based, proportionate and fair regulation; active multi-stakeholder collaboration; and, consumer protection.

The Governor explained that these principles are pragmatically implemented through their flexible “test and learn” approach in dealing with increasing digital transformations in the financial system.

This provides an opportunity for fintechs to participate in the financial system through collaborations with banks and other financial industry players to achieve greater scale, within the regulatory environment established by the central bank.

He pointed out digitalisation is expected to become an essential aspect of how people do business.

Thus, digital transformation should spur a complete change in mindset to allow for continuous and consistent innovation.

This entails allowing a different way of thinking, to grow in the midst of change.

Collaboration for an improved ecosystem

In order to develop international best practices as far as providing an enabling regulatory environment is concerned, the Bangko Sentral ng Pilipinas will reach out to fellow domestic financial regulators as well as international ones.

Rightfully so, the same applies to financial regulatory authorities. The rapid digital transformation of today requires not just new regulations, but demands fresh and bold approaches.

Fintech companies, many of which are start-ups and well established banks are being encouraged to collaborate for initiatives that will make financial products and services accessible to more Filipinos.

This transformation has completely altered the business landscape and has moved traditional financial institutions to adapt and innovate.

Furthermore, increasing consumer demands for better financial products and services have driven digitalisation to become a strategic priority for both financial and non-financial corporates.

It is undeniable that the digital revolution has arrived, and is here to stay.

According to the BSP Governor, the central bank has been preparing the groundwork for an expanded digital finance ecosystem in the last three years.

This ecosystem is marked by diversity of players responding to the varying needs of businesses and individuals, especially those that have been traditionally unserved.

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