The creation of an Open Finance Oversight Committee (OFOC), an industry-led self-governing body, will be completed within the year to adopt, update and enforce the rules of conduct of an open finance system, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.
“We’re targeting the complete creation of the OFOC within the year. As a follow through, the BSP will organize workshop sessions among the initial set of OFOC members to facilitate discussion and resolution of common areas for cooperation which include but are not limited to governance models, or composition of officers, priority used cases, and coordination arrangements,” said Diokno during his weekly press chat.
The OFOC, which the BSP will oversee, will set its own standards and procedures, and promote what the central bank described as a “non-discriminatory membership” that will represent all relevant sectors such as banks, non-bank financial institutions, electronic money issuers and operators of payment systems.
The BSP approved the Open Finance Framework last June after releasing the draft rules in December 2020 for the feedback of industry players.
Diokno said OFOC, which is a provision in the open finance circular, will “play a key role in setting into motion the critical components of the open finance ecosystem.”
However, it will be some time yet before Filipino consumers will experience the full benefit of open finance, said Diokno.
Open finance is defined as the sharing and leveraging of customer-permissioned data among banks, other financial institutions and third-parties for financial solutions such as those that provide real-time payments, financial transparency options for account holders, marketing and cross-selling opportunities.
“Even in the initial stages and potential birth pains in launching open finance used cases, it make take some time before the public can experience and realize the full benefits of open finance,” said Diokno.
As is, the open finance framework is expected to address data silos among industry players. “It is expected to encourage competition through entry of more players as well as financial service offerings,” he added.
Diokno also said that with open finance, Filipino consumers will have a consolidated view of their personal data and their financial transactions, access more affordable services that fit their needs and ultimately make more informed financial choices.
“For the local banking sector and other market players, open finance can enhance digital agility in the financial services space and bring competition to a new level,” said Diokno.
Open finance and open banking is included in the BSP’s three-year digital payments transformation roadmap. Also called open bank data, it provides information to third-party financial service providers through application programming interfaces or APIs.
“In establishing the open finance ecosystem, the BSP sees the value of placing the governance of the industry into a single body with explicit formalized self-governance structure where the industry standards and inter-participant business rules are housed,” said Diokno.
Basically the open finance framework allows for consent-driven data portability, interoperability, and collaborative partnerships with the same standards of data security and privacy.
Diokno explained that the underlying idea is that customers are the owners of transaction data. “(Thus) data should be shared if the customers wish to do so. As such, consumers will have the power to grant access to their financial data. Doing so will shape a customer-centric product development objective,” he said, adding that customers “will also have opt-in and opt-out mechanisms when they want to withdraw or modify the scope of their consent in the open finance ecosystem.”