According to a recent report, the Bangko Sentral ng Pilipinas (BSP) has shifted to a higher gear in dealing with cybersecurity threats and risks to financial technology (Fintech) while increasing the digitalisation of banking services.
As the economy grows, the central bank and the banking industry are turning more to digital transformation in the financial services for real-time and on-demand financial services.
This is in order to expand customer-base, but along more technologically advanced market comes higher risks and threats.
When funds are being channelled more efficiently, expediently and expansively, limitless opportunities that can drive business and industry growth as well as expand financial inclusion are within reach.
Before everyone gets too optimistic, however, there are potential risks arising from Fintech that the country needs to be careful of.
Given that these are not yet fully tested or mainstreamed technologies, there may be unforeseen hazards that transform or accentuate traditional financial risks.
These financial risks include credit, liquidity, market, operational and settlement risks. The added complexity can also mean greater vulnerabilities to cybersecurity threats and systemic risks.
There has been a significant growth in Fintech. According to the FinTech Global data from 2014 to mid-2018, the investments have reached US$ 41.7 billion.
The central bank is not curtailing the growth of the sector but they are mindful of the “trade-offs.”
The Bank continuously supports the development of an enabling regulatory environment conducive to digitalisation while managing associated risks.
As of current, there are no Fintech-focused regulations from the central bank that are in place. But, the Bank addresses potential risks by implementing risk-based, proportionate and “fair” regulations.
It also has an active multi-stakeholder collaboration and policies ensuring consumer protection.
Moreover, there have been key policy changes. These are new rules for money service business and regulation of virtual currency exchanges.
Since the bank is experiencing remarkable success in its digital transformation initiatives, it continues to remain steadfast in undertaking major organisational reforms and projects for a more proactive supervisory and regulatory stance.
The Bangko Sentral ng Pilipinas is recognised as a pioneer in digital and technology-related policies. Its virtual currency policy and IT security rules are a first in the region.
The most recent is its adoption of regulatory technology (RegTech) and supervisory technology (SupTech)
The Bank defines RegTech and SupTech as the “next generation of digital supervision tools and techniques to improve the speed, quality, and comprehensiveness of information supporting targeted and risk-based decision-making by regulators.