BSP plans to create self-governing open finance body

Based on the draft circular on open finance, the BSP said the OFOC which it will oversee, will set its own standards and procedures, and promote ‘non-discriminatory membership by ensuring that key areas of interest of the financial industry are adequately represented and that all members and applicants for membership are treated fairly and consistently’. The committee will also adopt, update, and enforce its own procedural rules and rules of conduct. The BSP has begun to circulate the proposed circular to banks and has set the deadline for comments and consultations by 23 December 2020. The BSP defines open finance as the sharing and leveraging of customer-permissioned data among banks, other financial institutions, and third-parties to build innovative financial solutions, such as those that provide real-time payments, greater financial transparency options for account holders, marketing, and cross-selling opportunities.

The proposed framework has a tiered approach to its implementation by data sensitivity, data type, and data holder type. The proposed circular will cover technology, products, and policies that will enable customers to ‘securely compare’ financial services from qualified third-party service providers that are either account information service providers and/or payment initiation service providers. According to the BSP policy statement on open finance framework, it recognizes the benefits of a “consent-driven data portability, interoperability and collaborative partnerships” of banks and third-party players. In the draft circular, BSP declared that open banking has enabled banks to produce new products and services that are ‘beyond bank accounts’ and ‘revolutionising the way consumers and businesses use financial services’. The proposed circular was completed after the BSP’s survey on banks in June 2020, which supported its comparative study of other countries’ open finance regulation. 

Open finance and open banking is included in the BSP’s three-year digital payments transformation roadmap. Also called open bank data, it provides information to third-party financial service providers through application programming interfaces or APIs. The Monetary Board has recently approved the digital bank circular. There are 10 banks that are currently in the process of applying for digital bank license with the BSP, according to the Manilla Bulletin.