The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, is reportedly looking into adopting a virtual banking framework so that it may be leveraged to enable greater financial inclusion.
The new digital banking guidelines are being developed to support a regulatory environment that promotes responsible innovation. The new rules will also aim to support cyber or online resilience while enabling the ongoing digital transformation of the financial services industry.
Introduced in December 2020, BSP’s “Guidelines on Establishment of Digital Banks” states that a virtual bank is a financial organization or entity that may be categorized as a bank, providing financial products that are delivered end-to-end via an all-digital platform with no physical branch locations.
Digital banking platforms are expected or required to maintain proper digital governance while offering secure, robust, and resilient tech infrastructure, according to the announcement. Proper data management strategies and related best practices are also expected of these new financial services providers.
Digital banks must also adhere to the same set of applicable requirements as other banking solution providers. These guidelines include maintaining proper corporate governance structures, appropriate risk management policies, compliance, internal control and audit procedures, and reporting governance practices.
During his speech at the recently-held SAP Virtual Roundtable discussion, Benjamin E. Diokno, Governor of BSP, said that for the Philippines, “digital banking or digital finance in general as a strategy is not so much about being ahead of the curve.” Instead, it’s “more about capitalizing on its gains to bring about a more inclusive financial ecosystem.” he added.
It’s worth noting that other Asian countries like Pakistan are working on their own digital banking regulatory guidelines. In a manner that’s somewhat similar to the Philippines, Pakistan is also looking to leverage virtual banking solutions in order to enable financial inclusion and bring more people into the formal economy.
The Southeast Asia region, in general, has been increasingly adopting digital banking and modern Fintech solutions, which is a trend that has really accelerated following the COVID-19 outbreak.