CEBU CITY, Cebu (PIA) -- With a large population of digital native young Filipinos and the growing number of Filipinos in general who are using digital transactions, the Bangko Sentral ng Pilipinas (BSP) said the Philippines is ready for digital adoption. 

According to Maria Lourdes Jocelyn S. Pineda, vice president of the Digital Bank Association of the Philippines, 72 percent of the Filipino population belongs to a large digital native young population who are 40 years old and below. 

“We also have a high consumptive population ages 15 to 65 years old,” added Pineda during the BSP’s 5th Regional Macroeconomic Conference Series (RCMS) held recently in Cebu.

Pineda said the increasing popularity of digital payments is the result of BSP’s efforts towards financial inclusion. 

“Digital banks are the result of BSPs’ push for financial inclusion. It is intended to provide access to all the Filipinos with swiffer financial services at a lower cost,” said Pineda.

Because of the digitization programs and the population gearing towards digital transactions, there was also a need for digital transformation in the financial sector.

Digital transformation 

The lockdowns during the COVID-19 pandemic spurred the need for digital transformation in the financial sector, with more people resorting to digital payments. 

“Due to the COVID-19 pandemic, there was an urgent need for digital payments, especially since we were locked up in our homes during those times,” said Maria Christina S. Masangkay, BSP acting deputy director of the Payments Policy and Development Department during the RCMS.

“So we in BSP must look for ways to enable the people to pay their bills, transfer funds just by using their mobile phones or computers at home,” said Masangkay.

Pineda said that following the COVID-19 pandemic, digital banks started to be operational in 2021 after being approved in December 2020 as a new bank category by BSP Governor Felipe Medalla.

Digital banks are open 24/7 year-round, and have higher interest rates due to lower operational costs. 

Pineda said there are currently six licensed digital banks in the Philippines, namely GOtyme, UnionDigital, Overseas Filipino Bank, Tonik Bank, UNObank, and Maya Bank.

She emphasized that digital banks are not the same as banks that provide digital services.

“You can open an account with us in five minutes using your mobile phones and we use point biometrics for facial recognition which is secure, not just a selfie. We use social media, mobile, analytics, and the cloud in our systems,” she added.

Payment rails

Following the mandate of Republic Act 11127 or the National Payment System Act and Republic Act 11211, BSP oversees and supervises the payment and settlement systems of the Philippines.

Its expansion on the national retail payment system is one of inclusion and interoperability, where consumers can transfer funds from one account to another in any participating BSP-supervised financial institutions (BSFI), regardless if it is a bank or non-bank electronic money issuer.

“This mandate gave birth to the two payment rails we know today, the PESONET and Instapay,” added Masangkay.

BSP also initiated the QRPh, BillsPayPh, and automated fare collection systems for modern jeepneys, trains, and buses.

“We are working together with our partner agencies for the alignment of these projects, the Palengke QR, E-invoice, and other digital payment schemes including the safety nets so everyone can benefit from these projects,” said Masangkay.

Cybersecurity

Due to the dependence of digital banks on technology, these banks have invested in cybersecurity to protect their consumers. 

“We are always vigilant, and we invest heavily on technology because we can’t afford to commit mistakes,” said Pineda.

She said that with the development of new programs targeting consumers and small and medium-sized enterprises, the total loan book for digital banks is expected to double in 2024.

BSP has also intensified its cybersecurity programs to enhance the cyber resilience of the financial sector.

With the usage of the cloud and increased digital payments and financial services, cybersecurity policies have been implemented, including cybersecurity hygiene practices and cybersecurity risk management.

BSP also reminded depositors and consumers against text scams and to take care of their one-time password or OTP especially when doing online transactions. 

BSP has been conducting the RCMS in key cities nationwide as a venue to work together, discuss, and help find and identify issues and reach a solution.

“BSP can gather information, your experience on the ground so that it goes into our analysis and also goes into the policy-making that takes place. Together by providing information and sharing information we have, we can build a collaborative agenda for growth not only for the businesses, not only for banks but for the government and the common people,” said BSP Monetary Board Dr. Bruce J. Tolentino. 

Mark Anthony Ynoc, one of the participants during the Cebu leg of the RCMS, the forum is an opportunity for the business sector to learn how the government is addressing the current issues in the financial sector. 

"We need this to be on top on how we could address challenges such as the impact of El Niño and the minimum wage hike, since these can affect the different industries,” said Ynoc, who is currently the president of Mandaue Chamber of Commerce and Industry Inc. and general manager of San Remigio Properties, Inc.

He said the topics tackled during the conference, such as unemployment, gross domestic product, and exchange rates, are crucial issues in the business sector. 

“With all these challenges and facts, we need to see how we could address this to the government. As we work hand in hand in both the public and private sector, we have to have a long term roadmap toward creating strategies to address these issues,” said Ynoc. (MYP/PIA7 Cebu)