MANILA -- Technological innovations continue to shake even the banking industry, thus, the need to be open-minded and bold on how to tackle new ideas and developments in the sector.
This was stressed by Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi Fonacier in her keynote speech during the Philippine Investment Conference 2018 held at Shangri-la The Fort Wednesday.
With a population of more than 100 million, the number of Filipinos who maintain bank accounts is relatively small.
BSP data show that as of June 2017, 34.9 percent or 571 local government units (LGUs) in the country are unbanked or without a bank account.
Also, one out of 145 cities remained unbanked, which the central bank traced to the low income level of these jurisdictions.
While the archipelagic situation of the Philippines bars a lot of people from accessing the formal banking sector, technological innovations is among the solutions to this and address the issue of having a large number of unbanked individuals.
Fonacier said technological innovations have allowed for “development of solutions that enhance market reach and expand delivery channels.”
“Through technology, people from all walks of life, including those in unbanked and underserved markets, can have access to formal financial services that can uplift their quality of life,” she said.
To date, fund transfers, which are usually done through bank-to-bank transactions and the remittance centers around the country, can now be done with a click or tap on a mobile phone.
This shift is continuously being adopted by financial institutions to increase their customer base and provide real time, online and next-generation services, Fonacier said.
She said cloud computing and artificial intelligence as well as distributed ledger technologies “offer unparalleled opportunities than can radically transform the financial services landscape.”
She said banks and other financial institutions are awaiting regulatory approval for them to pilot their blockchain-based services and this, along with the increase in the number of financial technology (fintech) firms offering real-time cross-border transactions provides for a “vibrant ecosystem that can propel our economic growth to greater heights.”
Amid the positive impact of these developments, the central bank official said monetary officials are always on the lookout for potential risks from these innovations.
“Given that these are untested technologies, there may be unforeseen hazards that transform or accentuate traditional financial risks such as credit, liquidity, market, operations and settlement risks. The added complexity can also mean greater vulnerabilities to cybersecurity threats and systemic risks,” she said.
This is the reason for the establishment of the Financial Technology Subsector in the BSP “to ensure the operational as well as cyber-resilience of the financial system.”
Fonacier said “the changing risk landscape compels us to be open-minded and bold enough to test new ideas and concepts” while meeting their primary mandate of ensuring financial stability, consumer protection and safe financial system.
“The BSP hopes that we, together with the entire financial community, would be able to harness the full potential of fintech innovation - to sustain and fuel our economic growth and expand inclusivity for the benefit of all Filipinos,” she added. (PNA)
