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
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which is actually becoming outdated, Sec Dominguez said that it can “leapfrog”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.