Enabling regulations, pandemic pushed fintech sector’s expansion

THE CORONAVIRUS pandemic and an enabling regulatory environment have allowed more fintech firms to prosper in the Philippines and offer various products seen to help bring more of the population into the financial system.

In a BusinessWorld Insights session on Wednesday, experts discussed how the country’s finance ecosystem has evolved as more fintech firms emerged and forged partnerships with bigger players in the sector.

Bangko Sentral ng Pilipinas (BSP) Assistant Governor Edna C. Villa said the central bank’s regulatory approach has helped to boost the industry, with 220 fintechs recorded as of end-2020 from just 30 in 2016.

“The BSP’s stance on fintech innovation is to encourage responsive but responsible innovations. What I mean is the BSP would like to see the emergence of new models, products, and services, but at the same time, we have the assurance that timely identification and appropriate mitigation of risks associated with these new products are in place,” Ms. Villa said.

She noted key regulatory issuances such as BSP Circular 1105, which differentiated digital banks from traditional lenders, and BSP Circular 1122, which established an open finance framework, allowing players can share customer-consented data in aid of product development, are expected to help foster the continued growth of the financial sector as a whole.

V Ram, vice-president and chief technology officer of the Banking Financial Services and Insurance unit of Tata Consultancy Services, said the pandemic was crucial in the acceleration of the adoption of digital payments in the country. Banks and companies have been forced to undergo digital transformation, which normally happens in a span of five to seven years, during the pandemic, he said. This helped facilitate the use of online payments, which became a “lifeline” for many businesses and individuals, especially during the time when many countries imposed lockdowns.

“There was minimum travel, minimum movement. If it was not for digital payments that served as a lifeline, the movement of goods and services would have been a problem,” Mr. Ram said.