Open finance to promote digital transformation and financial inclusion

The Open Finance Roadmap 2021-2024 will boost digital transformation and stakeholder cooperation towards enhanced financial inclusion in the Philippines, according to the Bangko Sentral ng Pilipinas (BSP).

“The roadmap outlines priority actions, including the adoption of the policy framework, capacity-building for regulation, and cooperative oversight. It lays the groundwork for the establishment of an Open Finance ecosystem in the Philippines,” according to BSP Governor Benjamin E. Diokno.

Open finance is a model marked by collaboration and data sharing through Application Programming Interfaces (APIs). An API is a set of standard messages between two computer systems that makes possible machine-to-machine submission and validation of reports.

“Accelerating digitalization during the pandemic magnifies opportunities for wider connectivity. We consider the release of the roadmap as timely and critical for fintech solutions, financial regulators, and market players,” the Governor explained.

Open Finance promotes consent-driven data portability, interoperability, and collaborative partnerships among entities. It extends the principles of data sharing, security, and privacy across the different financial products.

Building on the release of the Open Finance Framework, the roadmap allows collaborative engagements with the private sector for the establishment of the Open Finance Oversight Committee (OFOC) and the development of industry standards under a test-and-learn approach.

In relation to this, the BSP has formally recognized members of the OFOC Transition Group to facilitate initial policies and standards formulation.

The Open Finance initiative is aligned with the BSP’s Digital Payments Transformation Roadmap 2020-2023 which aims to strengthen customer preference for digital payments and promote more innovative and responsive digital financial services.

By using APIs to perform financial intermediation and make connections to share information, Open Finance is expected to facilitate digital retail payments, thereby supporting the aim of digitizing half of total retail payments by 2023.

“The BSP will continue to closely coordinate with other financial regulators to monitor developments, conduct internal discussions, and draw up plans to foster cooperative oversight and innovative regulation,” the Governor concluded. (BSP)