Union Bank of the Philippines (UnionBank) is supporting the adoption of open finance and open banking with the goal of fast-tracking digital inclusion in the country. The Bangko Sentral ng Pilipinas released the guidelines on the Open Finance Framework last year.
The BSP aims to create a collaborative environment and created a three-year roadmap that will provide the industry with guidelines and a scalable framework to make the Open Finance ecosystem work.
“Open banking is the sharing of data among financial institutions which are related to payments and accounts,” Erika Dizon-Go, FVP and head of Fintech Business Group, UnionBank, said at a virtual briefing Tuesday. “Open finance is the sharing of data and even capabilities across the entire financial sector (including digital wallets, insurance, remittances, investments, and even fintech).”
UnionBank pointed out that data sharing within the industry is “quite low and highly fragmented.” Financial institutions have exclusive access to client data sitting in their databases. The framework will bring the power back to the consumers to decide who will have access to their data.
To further illustrate, Dizon-Go cited UnionBank’s partnerships with remittance centers during the lockdowns, which enabled consumers to send and receive money without going to the banks, which was prohibited at the time as a measure to curb the COVID-19 virus. The same goes for linking bank accounts to e-wallets, which contributed to the increase in the use of online payments.
As most banking customers transformed by using different platforms, legacy banks need to catch up and go where the clients are. UnionBank noted that “the Philippines is projected to have 75 million e-wallet users by 2023 and over 53 million online shoppers by the end of the year.”
“From a bank’s perspective, our customers started to use different platforms and services,” Dizon-Go said. “The actions that we used to do with brick and mortar stores and providers have evolved and moved into the digital space.”
UnionBank said that it leverages open APIs (application program interfaces), a technology used to connect (financial institutions) with each other.
However, while open finance and open banking have benefits, data sharing is the foremost concern among clients given that data breaches are happening at an alarming rate.
“We have to realize that at the core of open data and open banking is that there should be customer consent. We are giving back the power of data to the consumer. But as institutions, we make sure that aside from the set standards, we do more by continuously improving our data security and data processes to protect consumers.”
UnionBank said it has simplified its terms and conditions or consent form to help clients understand what types of data are they willing to provide the third party.
“The vision is to create an inclusive financial system in line with the technological breakthroughs presented by the open banking and open finance platform,” Dizon-Go said. “The BSP, along with the other central banks globally, has already integrated an open finance framework built on the principles of consent interoperability, and collaborative partnerships allowing us to confidently embrace the ecosystem and the open mindset.”