Philippines’ Department of Finance seeks assistance from WB-IFC for digital Overseas Filipino Bank
An announcement from the Department of Finance (DOF) highlighted a meeting attended by representatives from the DOF, the World Bank (WB) and the International Finance Corporation (IFC) to discuss the Philippines request for assistance in setting up the Overseas Filipino Bank, which will serve as digital banking for overseas-based Filipinos.
Assistance from the IFC, a sister organisation of the WB, is being requested by DOF Secretary Carlos Dominguez III. This is to keep the Overseas Filipino Bank (OFB) abreast with the rapid advances in technology and clear the way for its partial privatization in the future.
Sec Dominguez explained during a recent meeting with WB and IFC officials that he wants the OFB to start with a clean slate and leapfrog to digital banking. This move would make it more effective and responsive in catering to the financial needs of overseas-based Filipinos.
Since the OFB did not invest heavily in legacy systems, which is actually becoming outdated, Sec Dominguez said that it can “leapfrog” to new technologies instead and operate directly as a digital bank.
“It’s tabula rasa. No legacy mistakes here. But we don’t have the people and the system. So we’re looking at your expertise to assist here,” Sec Dominguez explained to the World Bank delegation led by Ms Victoria Kwakwa, the WB Regional Vice-President for East Asia and the Pacific.
IFC’s Vice-President for Asia and the Pacific Ms Nena Stoiljkovic, together with other IFC and World Bank officials, was also present during the meeting.
In response to Sec Dominguez’s request, Ms Stoiljkovic responded, “We’d love to take a look at that.”
She added that IFC is undertaking “similar types of interventions in other countries.”
During President Duterte’s campaign for the 2016 elections, he promised the creation of the OFB to the Overseas Filipino Workers (OFW). The DOF, under Sec Dominguez, helped fulfil the promise during the earlier part of 2018. The bank’s coverage has expanded to include all overseas-based Filipinos, not just overseas workers, to make it more inclusive.
One advantage of having a digital banking system for the OFB, according to Sec Dominguez, is having less state interference in the future. This is because the Land Bank of the Philippines, which has made the OFB a subsidiary, will control less than 50% of it in the future.
“We just need funds for all these, and we’re looking for assistance in this leapfrogging operation. This will allow us to partially privatise it in the future. Even bring down the share of Land Bank to below 50%. These are things we’re looking at,” Sec Dominguez said.
Moreover, according to Sec Dominguez, another advantage of OFB is how it can be the ideal vehicle for the Philippines to “leapfrog” to the digital economy. No need to set up physical branches around the globe as digital technology applications will allow OFB to serve as many overseas-based Filipinos as possible.
He added that the OFB could be transformed into a virtual bank with information technology (IT) experts replacing bank tellers and managers. These experts would have the knowledge to manage large amounts of data and operate the OFB using cutting-edge technologies.
The projected initial beneficiaries of OFB are 10 million OFWs. Having a digital Overseas Filipino Bank would radically transform the way Filipinos buy, receive, sell and distribute goods and services.