THE CENTRAL BANKS of the Philippines and Singapore have signed an agreement to collaborate on financial technology (fintech), amid an industry-wide push towards digital payments.

In a joint statement, the Bangko Sentral ng Pilipinas (BSP) and the Monetary Authority of Singapore (MAS) announced the signing of a FinTech Cooperation Agreement (CA) yesterday in the city-state, in time for the 2nd Singapore FinTech Festival.

“The CA provides avenues for greater collaboration through a more defined structure and referral system for FinTech players between the innovation functions of each authority,” BSP Governor Nestor A. Espenilla, Jr. was quoted as saying.

Both regulators have been increasingly embracing digital financial services, as they update banking regulations to allow so-called “disruptors” and non-banks under its watch. The agreement fosters the commitment of these central banks to “elevate financial innovation” in both economies.

The two central banks have employed the regulatory sandbox approach, which allows emerging fintech players room to experiment with new products and services before they are covered by banking regulations.

“The authorities will be able to refer promising FinTech firms to each other, share emerging FinTech trends and developments, and facilitate work on FinTech projects together,” the regulators said in a statement issued on Thursday afternoon.

The deal would likewise allow the two players to tap digital solutions such as distributed ledgers in order to facilitate “faster cross-border payments” and streamline know-your-client procedures. Innovation which have allowed one central bank to address industry problems could also be shared to its counterpart.

The BSP and the MAS have yet to start bilateral deals under the banking integration framework of the Association of Southeast Asian Nations, which would allow qualified banks in one country to operate in the other jurisdiction once in place.

Instead, the central banks chose the fintech arena as their starting point for engagements.

Mr. Espenilla said he is counting on insights from Singapore’s experience to unlock a more progressive and inclusive financial system by embracing new digital platforms.

“MAS and the BSP are like-minded in their focus on harnessing financial technology to reduce inefficiency and benefit individuals and businesses” MAS Managing Director Ravi Menon said.

The BSP has adopted a National Retail Payment System framework which allows more fintech players to offer electronic platforms, with the goal of broadening access to financial services among Filipinos. The central bank wants to raise the share of digital payments to 20% of all transactions by 2020 coming from a mere 1% share in 2013, with the view that online solutions will bring down costs and spur increased economic activity. — Melissa Luz T. Lopez

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