Fintech development a priority, but stricter rules needed — BSP

MANILA, Philippines — The pursuit of financial inclusion through promotion of financial technology or fintech remains among the central bank’s top agenda under its new leadership.

BSP Governor Benjamin Diokno said the central bank would continue to enhance the regulatory environment to enable fintechs to flourish, while putting in place the appropriate safeguards against risks.

“We pursue inclusion amid a global financial ecosystem that is in a state of digital transformation. Of course, you are all well aware of that – as fintech firms are a big reason for it,” Diokno said

At the same time, the BSP is mindful of attendant risks and any unintended consequences that technological innovations may bring, especially when it comes to consumer and data protection.

“Because of this, a deliberate part of our strategy is to further deepen our financial education and consumer protection initiatives. This balanced regulatory approach is anchored on the core principles of risk-based, proportionate and fair regulation; active multi-stakeholder collaboration; and, consumer protection,” he said.

Diokno said these principles are pragmatically implemented through our flexible “test and learn” approach in dealing with increasing digital transformations in the financial system.

“This provides an opportunity for fintechs to participate in the financial system thru collaborations with banks and other financial industry players to achieve greater scale, within the regulatory environment established by the BSP,” he said.   

He pointed out digitalization is expected to become an essential aspect of how people do business.

“Digital transformation should, therefore, spur a complete change in mindset to allow for continuous and consistent innovation. We should allow ourselves to think differently, to grow in the midst of change,” he said.

The BSP, Diokno said, would reach out to fellow domestic financial regulators as well as international ones to put in place international best practices as far as providing an enabling regulatory environment is concerned.

“Rightfully so, the same applies to financial regulatory authorities. Today’s rapid digital transformation requires not just new regulations, but demands fresh and bold approaches,” he said.

The BSP chief called on fintech companies, many of which are startups, and well established banks to collaborate for initiatives that will make financial products and services accessible to more Filipinos.

“This transformation has completely altered the business landscape and has moved traditional financial institutions to adapt and innovate. Furthermore, increasing consumer demands for better financial products and services have driven digitalization to become a strategic priority for both financial and non-financial corporates. There is no denying it. The digital revolution has arrived. And it is here to stay,” he said.

According to Diokno, the BSP has been preparing the groundwork for an expanded digital finance ecosystem in the last three years, one marked by diversity of players responding to the varying needs of businesses and individuals, especially those that have been traditionally unserved.