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Empowering the Philippine Financial Sector with Technology

In the midst of the coronavirus pandemic, the Philippine central bank urges financial technology companies to take advantage of the rise of digital transactions and to offer much-needed services to the Filipinos. Bangko Sentral ng Pilipinas (BSP) said that the continuing crisis of public health has caused an increase in volume and value in digital-driven transactions.

The Covid-19 situation highlights the need for local banks and other financial institutions to be more inclusive, as well as the urgency to address the huge gap in financial services for small businesses, both of which are critical to the economy’s growth, with MSMEs accounting for 99.5% of registered businesses in the Philippines.

Fintech applications and technologies are constantly evolving, allowing more Filipinos to conduct financial transactions without the need for a bank account. Fintech products, such as e-wallets, allow users to transfer money digitally and build credit, making it easier for them to borrow funds in the future.

Strike while the iron is hot and offer breakthrough platforms, services and digital systems to automate, expand and facilitate access to financial services.

– Bangko Sentral ng Pilipinas (BSP) Governor

Moreover, the proposed framework for open banking by the Bangko Sentral ng Pilipinas (BSP) aims to benefit MSMEs by encouraging financial inclusion and making the deployment of innovative financial services faster and easier. With the right infrastructure, banks and fintech companies can create more cost-effective, personalised, and seamless solutions for MSMEs, facilitating distribution, data sharing, and payment enablement.

All these initiatives strive to assist BSP-supervised financial institutions’ digital transformation programmes, including fintech players, while also promoting sound risk technology and cyber risk management.

Earlier this year, the central bank and the country’s other financial regulators agreed to develop a unified monitoring and supervision scheme for the local fintech industry that does not stifle these firms’ innovative and creative ideas. To that end, a memorandum of understanding on the establishment of a cooperative oversight framework on fintech innovation was signed under the auspices of the multiagency Financial Sector Forum.

A local lender in the Philippines announced recently that its financial inclusion app will be updated with new features in collaboration with a local software and IT solutions firm. The new features, powered by the IT firm, would allow all of its users to conduct end-to-end online transactions with more than 20 government agencies, such as passport application and renewal, clearances and certificates, and etc.

OpenGov Asia had reported that COVID-19 is likely to result in a significant and long-term expansion of digital payments. To make a smooth transition to digital payments, which will be an essential part of the more digital post-COVID-19 world, Asian economies must strengthen their regulatory frameworks and invest in digital networks and infrastructure, such as those that support the use of digital IDs. Contactless payment systems require robust identification systems backed by a certification authority, dependable internet networks, and trustworthy financial services.

With the rate of digitisation increasing in the Philippines, e-commerce merchants must capitalise on this shift in consumer attitudes by offering a variety of payment options along with appealing offers to attract the attention of a wide range of users. Offering multiple payment methods, including cash, and collaborating with local partners who have a thorough understanding of the Philippine’s market (not just retail and payments, but also logistics fulfilment and last-mile deliveries), could assist in transforming the Philippine’s into an e-commerce territory, opening more opportunities in the rest of Southeast Asia.

The Philippines’ fintech industry is thriving and demand for fintech products and services is expected to rise further. According to the Department of Trade and Industry, the number of start-ups entering the country’s fintech sector is increasing at a rate of 16% on an annual basis (DTI). The Philippines will become a more financially inclusive country as more fintech solutions become available and adoption grows. This would mean that more small businesses would have access to the financial services they require.

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