A financial technology (fintech) group said the Philippines is establishing itself as a digital hub in the Asia-Pacific after monetary authorities released an online banking framework.
The FintechAlliance.ph, in a recent statement, welcomed the approval of the digital bank licensing regulations by the Bangko Sentral ng Pilipinas (BSP).
“Coupled with the recently released draft on the guidelines on open finance framework and a comprehensive digital payments transformation roadmap, the Philippines is poised as an emerging digital hub in the Asia-Pacific region,” FintechAlliance.ph Chairman Angelito M. Villanueva said.
Earlier, the Central Bank introduced a digital road map, which aims to make at least 50 percent of total retail payment transactions be accomplished online by 2023.
In addition, it also targets 70 percent of adult Filipinos to be financially included in the same period.
Last week, the Monetary Board green-lighted the recognition of a digital bank as a new bank category, which is separate and distinct from other current classifications. It is defined as a bank with no physical branches, offering financial products and services via digital platforms.
“Digital banks will play an important role in the digital financial ecosystem,” BSP Governor Benjamin E. Diokno said in an earlier statement. “We see these banks as additional partners in further promoting market efficiencies and expanding access of Filipinos to a broad range of financial services.”
Considering the cybersecurity and money laundering risks, the BSP said that digital banks would be subject to the same applicable requirements, which are in proportion to their business and risk profile.
The Central Bank noted that the digital banks also need to have sound digital governance, secure technology infrastructure and effective data management strategy and practices.
The framework notes that the digital bank’s principal place of business—housing the offices of management and other support operations—should be in the Philippines. In addition, the neo-banks are also allowed to tap cash agents and other qualified service providers subject to existing regulations to complement the innovative delivery of financial services.
The digital banking framework came at a time when more foreign fintech players and conventional banks are beefing up their online offering, FintechAlliance.ph said.
“We are seeing more foreign technology players coming in and traditional banks levelling up to be at par with the increasing competition towards creating its own hybrid neo-banks,” Villanueva said.
The fintech group said that more developments in the digital financial service sector benefit customers the most, providing them a wider array of options.
“At the end of the day, it is all about delivery of awesome customer experience and unique value proposition,” it added.
According to the Philippines Fintech Report 2020, there are currently over 190 fintech players in the country, mostly offering services in lending, payments, digital wallets, and remittances.