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Governor of the Central Philippines, Benjamin Diokno (File photo)
MANILA Policies on the establishment of digital banks are expected to be ready before the end of 2020, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said on Thursday.
“The BSP is in the final stages of the policy-making process. We hope to issue the policy before the end of the year, ”he told reporters in a virtual briefing.
Diokno said that the central bank will start accepting requests for authority to establish digital banks once the policies are in place, but stressed that they will limit the number of actors regarding the overall banking situation.
He said the pandemic increased the need to further accelerate the shift to a digital financial ecosystem, which is why the BSP has formulated a three-year digital payments transformation roadmap.
“This initiative encourages the creation of a digital financial ecosystem that supports financial inclusion,” he said.
The BSP previously set a goal of increasing the share of electronic payments to 20 percent of total payment transactions in the country by 2020.
Diokno said the community quarantine provided a boost for this goal, hence the shift in figures from 20 percent of electronic payments by 2020 to about 50 percent of total transactions by 2023.
He said that an important factor for this goal is the proposed regulatory framework on digital banks, as these institutions “can help promote financial inclusion by addressing long-standing supply and demand constraints for the provision of financial services.”
He said it is largely proposed that a digital bank have little or no reliance on physical touch points.
And given that these actors are considered to have the same financial risks as banks with physical officers, “they are expected to adhere to the same corporate governance and risk management standards in accordance with their business model and risk profile,” he said. .
Diokno said that digital financial institutions should have government management in information technology and cybersecurity, outsourcing, consumer protection, and measures against money financing and terrorism.
Relatively, Diokno said that the BSP continues to push for effective cybersecurity measures to thwart any threats.
“As BSP-supervised financial institutions embrace technology that has virtually no borders, protection of data or its ‘crown jewels’ becomes more crucial,” he said.
Therefore, he said, banks must now take a second look at their cybersecurity strategies and possibly adopt a shift to a “zero trust” operating model.
“The strengthening of data protection is in line with BSP’s broader efforts to drive the cyber resilience of BSP-supervised financial institutions,” he added. (PNA)
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