BSP to issue unified data framework

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) plans to issue before the end of the year a unified policy governing the handling and use of digital data gathered by banks from their clients.

BSP Deputy Governor Mamerto Tangonan said the central bank is crafting the framework on data governance and ethical use of data policy for BSP-supervised financial institutions (BSFIs).

“The issuance will be geared toward ensuring that all the information obtained and passing through different digital channels will be handled ethically and that all participants will be bound by key data governance principles,” Tangonan said.

In adopting digital governance standards for the protection and privacy of consumer data, the regulator said the proposed policy should add another layer of “high level principles and supervisory expectations” for all BSFIs’ ethical use of data.

The proposed policy, according to the BSP, is in addition to the current governance standards relating to the protection and privacy of consumer data, including the enhanced guidelines on information security management under Circular 982 issued in November 2017, as well as the consumer protection framework under Circular 1048 approved in September 2019.

The data governance standards aim to protect the right of financial consumers to expect that their data are secured and kept confidential, including the transaction, as well as relevant information disclosed in the course of a transaction.

The standards aim to ensure that financial service providers conduct business ethically and do not engage in practices that may be detrimental to the consumer.

Furthermore, the proposed framework, in line with international standards aims to establish robust infrastructure and data standards amid the broader use of digital payment platforms.

Under Basel Committee on Banking Supervision 239 Principles, there is a need to strengthen risk data gathering capabilities and internal risk reporting practices to enhance risk management and decision-making processes among banks.

Tangonan said the proposed policy on data governance and ethical use of data for BSFIs is one of the key component of the central bank’s Digital Payments Transformation Roadmap which aims to shift 50 percent to total retail transactions to digital channels and raise the number of Filipino adults to 70 percent by 2023.

He said the BSP also issued the open finance framework under Circular 1122 on June 17 to serve as a key enabler for digital transformation and financial inclusion.

Tongonan also said the open finance framework promotes consent driven data portability, interoperability, and collaborative partnerships among entities that adhere to the same standards of data security and privacy.

“The BSP provides an enabling regulatory environment that allows innovations to thrive while maintaining the safety, efficiency and reliability of the national payment system,” he said.

The   pandemic has served as a catalyst to digitalization as Filipinos shifted toward digital financial services.

BSP Governor Benjamin Diokno earlier said the shift provides the central bank with greater impetus to balance its promotion of financial inclusion and digital finance with the need to ensure information security.

“In the digital realm, we know that consumer data are a valuable and often times, a monetized asset. Hence, we have what we call, data as currency. The wider use of e-payment platforms should therefore be supported by robust infrastructure and governed by sound data standards,” Diokno said.