The government ought to double down its initiatives on open finance, as it races to achieve its financial inclusion goals this year, according to the European Chamber of Commerce of the Philippines’ (ECCP) Special Committee on Open Finance and Financial Inclusion (SCOFFI).
As the new administration assures that it will prioritize digital transformation on a national scale, the ECCP-SCOFFI believes that it is high time that the government places more premium on the development of policies and the rollout of more open finance initiatives in the country.
Open finance allows industry players to create customer-centric products and provide better access to critical financial services such as savings, insurance, and credit. This year, the Bangko Sentral ng Pilipinas (BSP) aims to bring at least 70 percent of adult Filipinos into the formal financial system, but as of 2022, 47 percent of the population remains unbanked.
“With multiple economic crises at present and a looming global recession ahead of us, financial inclusion should be emphasized now more than ever. The inclusion of multiple economic sectors in the Philippines is crucial, especially considering that we are still recovering from the impact of COVID-19 and many challenges are already being posed by the circumstances in the post-pandemic era. As staunch advocates of inclusivity, we at ECCP-SCOFFI vow to support the government’s endeavors towards financial inclusion and open finance,” ECCP-SCOFFI Chairman John Januszczak said.
Januszczak, who also sits as president of UBX, the leading open finance platform in the Philippines, added that open finance can help in rebuilding the economy by strengthening digital businesses.
He cited a Google and Temasek study that predicted that the Philippine digital economy, currently valued at $20 billion, is expected to maintain an upward trajectory to as much as $150 billion in the next decade.
“This trend highlights the urgent need for the government to accelerate its digital transformation initiatives to maximize the potential of the digital economy. Digital finance will be the bedrock of digital transactions. Through open finance, we can help reduce finance and even social inequalities in the Philippines,” Januszczak said.
Under Januszczak’s leadership, the UBX supported the government’s open finance initiatives through several projects.
Digital Transformation ng Pilipinas (DigiPinas), a UBX-led multisectoral initiative for digital transformation in the government, was launched in 2022. DigiPinas aids the government in crafting policies related to digital transformation, geared towards solving age-old problems such as low digital adoption, lack of awareness, gaps in access, digital skills gap, and complex regulations.
DigiPinas also helped in bringing digital solutions to the national and local governments, especially those that are in the far-flung and rural municipalities.
UBX also launched last year Project Kasama sa Lahat with the Philippine Postal Corp. (PhilPost), which is currently transforming hundreds of its post offices nationwide into modern hubs that offer financial and data services to far-flung areas.
In addition to widening its geographic scope, open finance also seeks to benefit the micro, small and medium-sized enterprises (MSMEs), which include sari-sari stores, carinderia, and fish stalls that rely on loans to sustain their businesses.
Moreover, UBX’s SeekCap, its online lending platform, provided entrepreneurs access to loans that they need to expand their businesses.
Additionally, i2i, the banking-as-a-service platform of UBX, empowered MSMEs to become cash agents, enabling them to process financial transactions similar to banks.
“Achieving financial inclusion is not just a one-man agenda. It requires cooperation among all those involved, but it must be emphasized that the government must be at the forefront of this campaign. I have full faith in our leaders that they will call upon the best people for the job in promoting its open finance initiatives,” Januszczak said.
Established to promote financial inclusion in the Philippines, ECCP-SCOFFI provides an avenue for stakeholders to discuss issues and solutions to the status quo while fostering financial inclusion through technology. Together with UBX, the Special Committee has been a big help to the BSP when it comes to formulating open finance standards and procedures for better implementation.