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Technology Advancement to Boost the Philippines Digital Economy

The Bangko Sentral ng Pilipinas (BSP) strives to be at the forefront of wide measures aimed at making the Philippine economy stronger and more technologically advanced. The Bangko Sentral ng Pilipinas had claimed that digital banks, together with traditional banks, can help the country recover from the COVID-19 pandemic, as part of its quest for a “tech-savvy” economy. Digital banks are financial institutions that do not have physical locations and are aimed to make banking more accessible to the unbanked and underserved.

The BSP earlier approved a framework for digital banking in the country before it issued 6 digital banking licences. This is part of its efforts to make the Philippine economy stronger and more technologically advanced. A digital bank provides end-to-end financial goods and services via a digital platform and/or electronic channels, rather than through a physical branch, sub-branch, or branch-lite unit.

Technology aids exponential growth in output. In finance, it makes transactions easier and faster which speeds up income generation.

– BSP Governor Benjamin E. Diokno

By 2023, the BSP hopes to have digitalised 50% of payments and encouraged 70% of the population to open bank accounts, according to its Digital Payment Transformation Roadmap. “We expect the digital banks to help fuel recovery and long-term growth for the Philippines, alongside conventional banks,” the Governor said. “The Philippines does not simply aim to recover from the crisis. There is a whole-of-government effort toward a post-COVID Philippine economy that is better than ever. This means an economy that is stronger, more technologically advanced, more inclusive, and sustainable.”

OpenGov Asia reported, when the country implemented health and social-distancing protocols, the COVID-19 pandemic catalysed the shift in awareness and provided the necessary push for more consumers – individuals, businesses, and the government – to use digital payments.

Governor of the Bangko Sentral ng Pilipinas (BSP) is optimistic that a payment system based on the quick response (QR) code will help the central bank’s efforts to increase electronic payment transactions in the country despite the country’s poor internet connectivity. He stated during the virtual launch of the QR PH P2M programme that the QR PH for person-to-merchant (P2M) transactions uses QR codes.

Electronic payments, which got boosted since the government-imposed movement restrictions at the start of the pandemic, are expected to grow even more with the use of QR codes for payments. The governor expressed optimism about the future growth of digital financial transactions, citing the fact that more people now own smartphones and have access to the internet.

In addition, Governor Benjamin Diokno of the Bangko Sentral ng Pilipinas (BSP) spoke at the Chamber of Thrift Banks (CTB) virtual conference last month, emphasising the importance of banks’ contributions in improving public access to enhanced financial services and their collaboration in financial inclusion reforms.

The thrift banking sector, according to Diokno, can exploit the country’s solid macroeconomic fundamentals and current reforms to become more resilient post-pandemic. According to him, the central bank, for example, has published the Open Finance Framework, which encourages consent-driven data portability, interoperability, and collaborative partnerships between financial institutions and third-party providers.

“Through ‘permission-based access to customer financial information, financial institutions and third parties will gain access to financial information necessary to develop innovative products and services that are suited to the changing consumer needs,” he added.

the central bank will also establish policy on outsourcing and a regulatory sandbox, or “test and learn” framework, which will help smaller institutions, such as thrift banks, to digitalise more quickly. The BSP also stated that a course on digital transformation to assist thrift banks in preparing for a digital-ready culture and environment is also in the pipeline.

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