As a component of its overall strategy, the Bangko Sentral ng Pilipinas (BSP) recently issued BSP Circular No. 1122, series of 2021, which lays out the rules for the development of a framework for open finance.
In the circular, the BSP defined open finance as the next step beyond banking that “leverages on and allows the sharing of ‘customer-permissioned’ data among banks, other financial institutions, and third-party providers (TPPs) to develop innovative financial solutions, such as among others, those that provide real-time payments, greater financial transparency options for account holders, marketing, and cross-selling opportunities.”
The Open Finance framework covers technology, products, services, information, and policies that enable customers to securely share their financial data with qualified parties, either with BSP-supervised financial institutions (BSFIs) or with TPPs.
Under this framework, financial institutions and TPPs can leverage access to this ‘customer-permissioned’ financial information to develop bespoke financial products and services for customers.
It added that the framework aims to empower customers by giving them better control of their personal and financial data as well as by catalyzing the development of products and services that are responsive to their needs.
The circular further said that the Open Finance Oversight Committee Transition Group (OFOC TG), an industry-led self-governing body, will be called upon to help shape, promote, develop, and oversee elements of an innovative and inclusive market for open finance services.
The initial set of members of the OFOC will be comprised of representatives from each bank classification, non-bank financial institutions, electronic money issuers, operators of payment systems, TPPs, and other relevant sectors. They will be subject to the regulation and supervision of the BSP.
Now open for standards consultation
The Bangko Sentral ng Pilipinas is inviting interested BSP-supervised financial institutions (BSFIs) and third-party providers to participate in the standards consultation for the Philippine Open Finance Pilot (“PH Open Finance Pilot”) to inform them of the development of open finance technical and operational standards and arrangements.
“We call on our BSFIs 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,” entreats BSP Governor Felipe M. Medalla in a press statement.
The “PH Open Finance Pilot” is a collaborative undertaking of financial institutions and third-party providers, participating on a voluntary basis, to explore the use of Application Programming Interface (API) technologies in the delivery of financial products and services responsive to the needs of customers.
The BSP recognizes that the PH Open Finance Pilot is an important initiative in promoting a responsive, responsible, and inclusive digital financial ecosystem characterized by innovation-driven use of consumer data.
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).
For more information, interested parties may visit www.openfinanceph.org.