BSP is closely studying financial technology sector

The central bank is comfortable – for now – on how they monitor and assess the growth of Fintech or financial technology companies in the Philippines and are confident that they have rules appropriate for a variety of financialrelated operations.

Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said they have to be in the loop on how the sector will develop particularly as a support system to the financial sector. At the moment, he thinks they have adequate regulation for Fintechs.

“(BSP) needs to stay plugged in and understand what’s going. That’s why we’re also in constant dialogue with the industry and they have been very open with us, they come to us before they do anything (and) they ask us. That increases the level of trust and confidence in the system,” Espenilla said.

There are various Fintech operations and almost all are being watched by the central bank such as those that support the banking system. The BSP is aware of Fintechs that are service providers and offer services on their own but they are more interested in Fintechs that are acting as a connector between traditional banks and their customers. “The way we regulate Fintech depends on what they are doing so if they are doing bank-like services and taking money from the public then we will put them under a stronger regulatory environment,” Espenilla said. “If they are moving value – such as remittance – we also put them in an environment that is compatible with money laundering regulations. But if they are just basically providing a platform for a financial institution and making the financial institution efficient but they are not themselves providing services then there’s no need to regulate.”

Espenilla said they could catch banking-related Fintech operations under the BSP’s risk-based proportionate regulatory approach.

Fintech uses several modes to operate such as mobile wallet applications, digital KYC (know-your-customer), loan origination system, credit scoring, digital payment and remittance platform, and peer-to-peer transfer platforms.

Espenilla said the BSP supports responsible Fintech innovation to have more