Open finance has the potential to transform the financial industry by democratizing access to credit for the unserved and underserved segments in the Philippines, according to John Januszczak, president and CEO, UBX.
Speaking at the Digital Banker’s South East Asia Tour, Januszczak emphasized that open finance can unlock credit by leveraging non-traditional data to measure character and credibility rather than relying solely on traditional credit scores derived from banking transactions.
“Credit is the killer app for open finance in the Philippines because this is the biggest problem that has to be solved,” Januszczak said.
He noted the insufficiency of traditional credit scores in providing broader access to credit. He suggested that institutions could utilize AI to process alternative data for credit assessments, focusing on borrower credibility.
AI
Artificial intelligence (AI), he noted, is crucial in analyzing large datasets to uncover patterns of trust and credibility, essential for informed lending decisions. UBX is currently using AI to assess customer creditworthiness, enabling lenders on its platform to extend business loans to those without traditional credit scores. An example is Seneca Trucking, which accessed working capital through UBX’s online lending marketplace despite lacking conventional banking credentials, allowing the company to grow and benefit its community.
“We are creating an open finance platform where we collect massive amounts of data and use artificial intelligence to measure trust and credibility,” Januszczak said.
He cited data from the Securities and Exchange Commission, revealing a P12 trillion business credit gap in the Philippines. Globally, 4.5-5 billion people have limited to no access to financial services, including credit. To address these gaps effectively, Januszczak believes the financial industry must adopt a new mindset, embracing technological innovations like AI and data analytics to assess creditworthiness more accurately.
This shift prioritizes financial inclusion, ensuring access to financial services for everyone, especially those traditionally underserved by banks.
“Providing credit to people who really need it in the Philippines requires that we have that mindset shift,” Januszczak said.
He highlighted the significant benefits the Philippines could reap from embracing open finance, considering the progress UBX has made since 2019.
“What will it be like when we connect all 117 million Filipinos to the global economy without any barriers to access?” Januszczak asked.