BSP launches Open Finance PH


The Bangko Sentral ng Pilipinas (BSP) on Wednesday, June 21, launched and opened the registration of the Open Finance PH Pilot to enable financial institutions to give their customers more control over their data and expand financial inclusion.

The Open Finance PH Pilot, which will operate with the support of the World Bank’s International Finance Corp. (IFC), will develop open finance technical and operational standards and arrangements.

“With Open Finance PH, we are taking a big step towards unlocking equal access to financial services for all Filipinos and building a cyber resilient and open digital economy,” BSP Governor Felipe M. Medalla said during the launch.

“Enabled by strong partnerships, it’s time for all of us to embody responsible innovation, become leaders in the new era of finance, and write a new playbook for the banking system and the rest of the financial sector — one that truly won’t leave anyone behind,” he also said.

Medalla said open finance will help the unbanked, especially whose with little or problematic documentation, to “build a financial profile and credit history and, over time, access loans and other services that were once out of reach.”

The BSP explained that newly-launched pilot is voluntary to allow financial institutions to co-develop an open, inter-operable and scalable ecosystem that empowers consumers to take more control over their financial data and enable them to access a range of financial products and services from different providers.

Under the central bank’s rules and based on the 2023-2027 revised Open Finance Roadmap, only eligible BSP-supervised financial institutions will participate in the pilot.

With the launch, the BSP also started the registration for the pilot as per the recommendations of the Open Finance Oversight Committee Transition Group and a 19-member sub-working group or Standards Consultation Working Group.

The BSP said an open finance ecosystem “holds immense potential for all” particularly micro, small and medium enterprises (MSMEs).

“This opens up a world of products and services that better suit their needs, from tailored payment schemes to hyper-personalized investment recommendations (and) also assigns them more control over their data, as they will have to give consent before their information is shared,” said the BSP.

As for banks, fintech startups and other third-party providers, they can assess credit risk more efficiently, thereby reducing costs and opening up new revenue streams. It will be easier to extend the customer lifetime value, said the BSP.

The BSP has been engaging industry collaboration and competition and the IFC has been advising the BSP for the pilot project. The World Bank, on the other hand, provides technical assistance in building capacity and consensus across concerned government agencies.

“This puts the Philippines on the map when it comes to open finance,” said IFC Philippines country manager Jean-Marc Arbogast. “It positions the country right alongside more advanced markets like Singapore, the United Kingdom, and the European Union, all of whom catalyzed innovation by championing open banking initiatives,” he added.

The BSP started the consultation for the pilot project in February.

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 pilot will be governed pursuant to Circular No. 1122, and monitored by the OFOC TG.

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.