NextGen Day

The government continues to enhance its collaboration with banks and other financial institutions in order to raise the level of digital payments in the nation.

In his speech at the Chamber of Thrift Banks (CTB) virtual convention on October 12, 2021, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno emphasized the importance of banks’ contributions to increasing public access to improved financial services and their cooperation in financial inclusion reforms.

“Thrift banks are ideally positioned to be a driver for financial inclusion, with an extensive network of 2,744 banking branches distributed throughout the nation as of end-August 2021,” he added.

According to Diokno, the thrift banking industry can utilize the country’s solid macroeconomic fundamentals and current reforms to become more resilient post-pandemic.

According to him, the central bank, for example, has released the Open Finance Framework, which encourages consent-driven data portability, interoperability, and collaborative tie-ups between financial institutions and third-party suppliers.

“Through ‘permission-based access to customer financial information, financial institutions and other parties will get access to financial information required to create new products and services tailored to evolving consumer demands,” he said.

According to Diokno, the central bank is also planning to publish rules on outsourcing and the regulatory sandbox, also known as the “test and learn” framework, which is intended to promote digitization among smaller institutions such as thrift banks.

Another initiative in the works is the creation of a “digital transformation course to help thrift banks in preparing for a digital-ready culture and environment,” he added.

Diokno also emphasized the significance of implementing the Philippine Identification System (PhilSys), or national ID, since it would not only give Filipinos a unique, verifiable, and biometric-based digital identity but will also boost bank account ownership.

Under the national ID initiative, BSP has partnered with the state-owned Land Bank of the Philippines (Landbank) to allow applicants who do not already have a bank account to establish one at the same location where biometrics for the national ID is being collected.

Republic Act 11055, or the Philippine Identification System Act, was signed into law by President Rodrigo R. Duterte in August 2018. Its goal is to create a single national ID for all Filipinos and permanent foreigners.

The national ID card must be a legitimate form of identification that may be used to ease public and private transactions, school enrollment, and bank account creation.

It also aims to improve efficiency, particularly when interacting with government services, by requiring individuals to show just one ID during transactions.

“The Philippine economy’s continuing digital revolution is improving the way Filipinos make payments.” “This is the first step for Filipino customers to have access to a broader menu of digital financial services,” Diokno said.

Given the fast technological advances, he believes that the digital transformation of thrift banks’ systems, operations, and services is now critical.

“To stay up with the fast-changing times, thrift banks will have to adapt and explore new business methods,” he said.

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