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The Bangko Sentral ng Pilipinas (BSP) proposes the creation of an Open Finance Oversight Committee (OFOC), an autonomous industry-led body, as part of the country’s open finance framework.
Building on the draft open finance circular, the BSP said that OFOC, which it will oversee, will establish its own standards and procedures and promote “non-discriminatory membership by ensuring that key areas of interest in the finance 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 rules of procedure and conduct.
The BSP has begun to distribute the proposed circular to banks and has set the deadline for comments and inquiries for December 23.
The BSP defines open finance as the sharing and leveraging of customer-authorized data between banks, other financial institutions, and third parties to create innovative financial solutions, such as those that provide real-time payments, increased financial transparency options for holders of accounts, marketing and cross-selling opportunities.
The proposed framework has a tiered approach to implementation based on data sensitivity, data type, and data holder type.
“The BSP sees the value of placing the governance of the industry in a single body with an explicit formalized self-governance structure where industry standards and trade rules are housed among the participants,” said BSP Governor Benjamin E. Diokno, in the draft explanatory circular. Note. He said OFOC will conduct strong governance for open finance.
“In trying to establish an open finance ecosystem, the BSP hopes to engage industry players and engage them in an active dialogue to facilitate mutual learning and optimal determination of an autonomous industry-led body / authority, which is expected to enact membership and participation rules and to formulate rules and procedures for the industry, ”Diokno said.
The proposed circular will cover technology, products and policies that will allow clients to “safely compare” financial services from qualified third-party service providers that are account information service providers and / or initiation service providers. of payments.
According to the BSP policy statement on the open finance framework, it recognizes the benefits of “consent-based data portability, interoperability and collaborative partnerships” from banks and third parties. “The underlying idea of open finance is that customers are the owners of transactional and personal data, so such information will be shared if customers so desire. To this end, the BSP recognizes the potential complexities of models and trade agreements that will emerge from the implementation of the open finance framework, ”Diokno said.
In the draft circular, Diokno also said that open banking has enabled banks to produce new products and services that are “beyond bank accounts” and “revolutionizing the way consumers and businesses use financial services.” . The proposed circular was completed after the BSP survey of banks. in June of this year, which supported his comparative study of the regulation of open finance in other countries.
Diokno said local banks “generally supported the idea of pointing out the need for BSP to draft the circular with due regard to the views and knowledge gained.”
Diokno has said many times that open finance and open banking are an important part of his digital transformation agenda.
“Open banking is not without risk, given the potential for malicious third-party applications to steal customer information and other data protection breaches,” he previously said. Maintaining the privacy of client information is important as the BSP “lays the regulatory foundations to protect client confidentiality and the central systems of financial institutions,” he emphasized.
Open finance and open banking are included in the BSP’s three-year digital payments transformation roadmap. Also called open bank data, it provides information to external financial service providers through APIs or application programming interfaces.
The Monetary Board has recently approved the digital banking circular. There are 10 banks that are currently in the process of applying for the digital bank license with the BSP.
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