A year after announcing an open finance pilot program, the Bangko Sentral ng Pilipinas (BSP) is now calling for financial sector participants to standards consultations in 2023.
The BSP said on Wednesday, Feb. 1, that the PH Open Finance Pilot will enable a more “responsive, inclusive, and responsible digital financial ecosystem that is characterized by innovation-driven use of consumer data.”
“We call on our BSFIs (BSP supervised financial institutions) and third-party providers to proactively take part in the development of technical and operational standards and arrangements and carefully scrutinize the fundamental elements necessary in the establishment of a vibrant open finance ecosystem in the country,” said BSP Governor Felipe M. Medalla.
The pilot program is a collaborative project on a voluntary basis, to explore the use of Application Programming Interface (API) technologies in the delivery of financial products and services which will be responsive to the needs of customers.
The activities of the PH Open Finance Pilot, which will operate through the support of the International Financial Corporation (IFC), will be governed pursuant to Circular No. 1122, and monitored by the Open Finance Oversight Committee Transition Group (OFOC TG), said the BSP.
The BSP said open finance will accelerate financial inclusion by improving access to credit and improving the tools that micro, small and medium enterprises can tap.
As defined by the BSP, open finance is the extension of data sharing principles, assigning greater control to customers over their own data and enabling them to allow third party providers access to their data across multiple financial products and services.
Basically, 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.
The central bank previousely announced plans to pilot test at least three use cases for its open finance framework such as account opening, direct debit payments and fund transfers.
The OFOC TG is currently conducting preparatory activities for this year. They should be able to identify and determine areas of cooperation to enable open finance which is a model based on collaboration and data sharing API.
The Open Finance Roadmap 2021 to 2024 outlines priority actions and the adoption of the policy framework as well as the capacity-building for regulation and cooperative oversight. It will lay down the groundwork for the establishment of an open finance ecosystem in the Philippines.
The OFOC TG as the interim governing body, will lead the establishment of an open finance ecosystem in the country.
The committee’s primary and alternate members represent the universal and commercial banks, thrift banks, rural banks, digital banks, e-money issuers, operators of payment systems and financial technology or fintech sector.
The members of the OFOC-TG, which will serve for a two-year term, have the responsibility to facilitate the initial policies and standards formulation. They will also support pilot implementations under the open finance regulatory sandbox.