The Open Banking economy in the Philippines is still in early stages. However, the Covid-19 pandemic has created urgency for local financial institutions and the government regulators to launch new digital banking products, especially Open Banking APIs. Last September 17, Brankas and the Fund Managers Association of the Philippines (FMAP) hosted a first-of-its-kind event to educate financial services professionals on the opportunity of Open Banking. Titled “The State of Open Banking in the Philippines and Lessons from the Global Market”, the event was well-attended by over 200 members of FMAP, and featured 4 distinguished speakers:
- Mr. Todd Schweitzer, CEO & Co-Founder, Brankas;
- Ms. Erika Dizon, Vice President / Sales and Business Development Head, Fintech Group, UnionBank of the Philippines;
- Mr. Mark Anthony B. Perez, Director / Department Head, Department of Supervisory Analytics, Bangko Sentral ng Pilipinas (BSP); and
- Dr. Robert B. Ramos, CFA, CAIA, CIPM, First Senior Vice-President and Group Head, RCBC Trust and Investments.
The session began with Opening Remarks by FMAP President Mr. Noel Reyes, where he expressed his belief that “The new normal for sustainability of banks is embracing digital commerce and promoting the need for Open Banking.”
Mr. Todd Schweitzer commenced the keynote presentation by showing real-world use cases of Open Banking including authentication, payments, account opening, statement aggregation and SME financing. Because of Open Banking and API technology, processes that have long been associated with brick-and-mortar branches, heavy paperwork, and long turnaround times can now be executed with a touch of a button. FinTechs and other third party financial service providers have now become a new vehicle for driving adoption and innovation of banking services. He then attempted at a basic, non-technical definition of Open Banking: “the technology, products and policies that enable customers to securely use financial services from qualified third-party providers”. He added, “Open Banking is more than a policy mandate or a technology, it’s really an ecosystem, and a new economy within the financial services industry”. He ended his talk by sharing Open Banking policy recommendations based on Brankas’ experience across Southeast Asia. Regulators should encourage an opt-in model, he said, set rules for third party providers with regards to IT security, data protection and user consent, and suggested an industry-led and BSP-supervised Open Banking pilot to gauge demand and inform policy. Todd’s presentation left the audiences with a vision for what Open Banking can look like in the Philippines.
As the Business Development Head of UnionBank’s FinTech Business Group, Ms Erika Dizon shared her views on how the banking industry in general is coming to embrace digitization, and how Open Banking has shifted UnionBank’s focus from traditional core banking products to more customer-centric, frictionless digital products. She emphasized the importance of a wider availability of data, as it provides the benefits of better understanding of customers - and therefore better product offerings, better transparency that leads to better financial decisions, better fraud detection and risk modeling, and better information that can eventually inform policy. As services continue to evolve, she highlighted the concept of “deconstructing the bank”, moving away from typical core banking products and into specialized teams that build new products and applications in an agile manner. Soon enough, financial services will span multiple sectors including insurance, utilities, pension and even lifestyle apps, as data is shared freely between banks and third party institutions. She ended by saying that “Open Banking is not a matter of if, but when”. Banks’ roles will shift markedly from what it is now, and new financial ecosystems will continue to emerge.
As a leader in the BSP, Mr. Mark Perez recognised the crucial role that technological innovations have to enhance the delivery of financial services. The BSP envisions an Open Banking ecosystem which espouses consent-driven data portability, interoperability, and collaborative partnership among financial institutions and third party players – the promotion of collaboration to provide a smoother user experience. He believes that an Open Banking policy needs to be developed to lay down technical, security and governance standards to be adopted by BSFIs (BSP-Supervised Financial Institutions) that intend to publish APIs. As such, the BSP has begun drafting an Open Banking policy with a target release in the first quarter of 2021. These policies are intended to support new technology being developed instead of inhibiting it; and as Mr. Perez put it, “Ultimately, we believe that the presence of a supportive yet vigilant regulator, as well as a responsible and consumer-oriented financial system will be the key to strengthening our stakeholders' trust in the country’s digital agenda.”
Dr. Robert B. Ramos drew a connection from Open Banking to wealth management, emphasizing how more digitally-advanced banking services will greatly aid his sector, both on the management and client side. Open Banking will provide an easier client onboarding experience – what used to take upwards of 15 different forms and 2 months to process an account opening can now be done instantly. Accurate, real-time data can be acquired from clients, providing their spending patterns and trends across various demographics more quickly, thus allowing for more personalised services and products. Clients will be able to access products available across different entities, with just one integration. This provides a mutually beneficial relationship between managers and clients, making the experience more convenient for both parties involved.
This panel discussion highlighted the importance of Open Banking and why it matters now. COVID-19 has served as an impetus for many more individuals to shift to digital financial services for the first time, and Open Banking has shown to benefit all parties involved. Banks are able to procure new revenue streams and new data sources, as well as increase customer engagement and product innovation. On the customer’s side, they are given the abundance of choice – how to share their data, access financial products, and the like. Newcomers are given a more level playing field when entering the industry, allowing them to more easily identify and target neglected customer groups, test new commercial models, and easily partner with existing institutions. Reiterating Noel Reyes in his opening remarks, “We can say our banking industry is still in the early stages of full digital development, but we are getting there. And the desire to get there is getting stronger.” As such, digital technology is here to stay, and will truly be the driving force behind our transition into the new normal.
Brankas is solving the “last mile” for Open Banking in emerging economies. We empower banks, fintech partners and users to build and activate real-time secure APIs for payments, identity, transaction data, and more. Our vision is to make modern financial services available to everyone, by increasing access and partnership opportunities between financial institutions and the online economy.
Learn more: https://brank.as
The Fund Managers Association of the Philippines (FMAP) is an organization composed of local equity and fixed income fund managers with the primary mission of helping uplift the investing public economically through the practice of professional fund management that adheres to ethical standards and recognized practices globally.
It is also envisioned as a catalyst of change through the continuous education of its members and efforts to foster solidarity among the different investment sectors, in order to uphold the best interests of the investing public.
Learn more: https://fmap.com.ph/
Watch the full session here: https://youtu.be/x42OaDMCeBk