The Bangko Sentral ng Pilipinas (BSP) has approved the guidelines for the Open Finance Framework, touted as the “key enabler for digital transformation and financial inclusion” in the country.
“Open Finance is definitely not a sprint but a marathon,” BSP Governor Benjamin E. Diokno said over the weekend. Open Finance is part of the BSP’s Digital Payments Transformation Roadmap.
“It will be a long and challenging run but just like any other sport we need to properly prepare and condition ourselves to finish strong in this race,” he added.
The Monetary Board of the BSP approved the new guidelines for the establishment of Open Finance as Circular No. 1122 last June 17. Basically Open Finance is a “consent-driven data portability” as well as interoperability and collaborative partnerships between third-party providers (TPPs). It covers technology, products, services, information, that “enable customers to securely share their financial data” with banks and qualified TPPs.
The BSP said with Open Finance, consumers have power to grant banks or TPPs access to their financial data for a “customer-centric product development objective.”
“The BSP expects a tiered implementation of the framework based on data sensitivity, and types of data and data holder. The tiers are not necessarily sequential, and multiple implementations may occur at the same time,” said the BSP.
There are five tiers in the BSP policy for Open Finance. The BSP explained it this way: the first tier involves sharing of product and service information and other details of financial products/services that are already readily accessible online; the second tier involves sharing of subscription and new account applications information; and the third tier involves sharing of account information or personal and financial information provided by a customer.
The fourth tier, in the meantime covers transactions data, such as payments and other financial transactions data while the fifth tier covers those not covered by tiers 1-4 and other more complex financial products or use cases.
The BSP circulated the open finance draft circular last December 2020 and it included the proposal for the creation of an Open Finance Oversight Committee (OFOC) which is a BSP-recognized industry-led self-governing body.
The OFOC will exercise governance on the activities and participants of the Open Finance ecosystem, said the BSP. The BSP will supervise the OFOC which is expected to promote non-discriminatory membership.
Diokno said earlier that in establishing an Open Finance ecosystem, the BSP has consulted with global subject matter experts, conducted a survey with BSP-supervised financial institutions and completed a comparative study of the regulatory landscape in other jurisdictions.