Philippine financial technology (fintech) firms are backing a Bangko Sentral ng Pilipinas (BSP) proposal that would require banks and nonbanks to move away from accepting multiple forms of identification for account opening and digital onboarding and instead recognize the national ID as the primary proof of identity.

This forms part of the draft circular issued last week requiring BSP-supervised financial institutions (BSFIs) to integrate with the Philippine Statistics Authority’s (PSA) national ID authentication services (NIDAS) for customer due diligence.

FinTech Alliance.ph founding chairman Lito Villanueva said last Tuesday, Aug. 11, that the industry group is supporting the BSP’s proposal, especially as this could curb the incidence of financial account scams.

According to Villanueva, the central bank’s “push is now really going towards having a digital ID, and that will now be based on your Philippine Identification System (PhilSys)-issued national ID.”

Under the proposed rule, potential banking clients should experience frictionless transactions with financial entities. The national ID, across all recognized formats, stands as official proof of identity for government and private sector transactions.

Prospective customers will no longer need to present physical identification cards to open bank accounts or conduct transactions, as successful digital verification through NIDAS will serve as sufficient proof of identity.

“Last week, the BSP made a [draft] mandate that all electronic money issuers (EMIs), banks, fintechs, and even virtual asset service providers (VASPs) must utilize the PhilSys as the basic form of identification for it to be able to onboard as many customers as possible,” said Villanueva, who is also executive vice president (EVP) as well as chief innovation and inclusion officer at Yuchengco-led Rizal Commercial Banking Corp. (RCBC).

This directive aligns with broader government efforts to combat the “exponential growth of cyber fraud in the country.”

By standardizing identification, the industry seeks to optimize the PhilSys system to address the “proliferation of mule accounts and fraudulent account onboarding” that has plagued the sector.

This shift to a unified ID could also strengthen the Anti-Financial Account Scamming Act (AFASA), which has been in effect for over a year now, with BSFIs scrambling to meet the deadline for sophisticated fraud management systems (FMS) set for midyear.

After the deadline, victims of certain unauthorized digital transactions could soon be reimbursed, as banks and e-wallet providers may face new obligations to return funds to affected account holders.

Since AFASA took effect, the Philippine National Police (PNP) has filed more than 500 cases against fraudsters and scammers.

RCBC is already implementing the digital onboarding standards, using a vetting process where customers link their accounts with state-run pension fund Social Security System’s (SSS) portal and PhilSys to prove the legitimacy of their membership in the pension fund.

Fintechs and e-wallets are “united in terms of having to address the major concern pertaining to the proliferation of scams and fraudulent transactions,” Villanueva said.