THE CENTRAL BANK should allow market players to develop their own open finance framework, with the Bangko Sentral ng Pilipinas (BSP) only providing support when needed in the process, an industry group said.
Through open finance, permissioned data sharing and third-party access is extended to a wider range of financial sectors and products in a bid to ramp up digitization and to introduce new financial products for consumers.
“The BSP should only step in to weigh in and remove artificial barriers to competition such as refusal to interconnect systems or share information and can be placed by other government agencies particularly, the National Privacy Commission (NPC) with respect to personal data,” Fintech Alliance.ph Chairman Angelito “Lito” M. Villanueva said in a statement on Thursday.
The central bank released a draft proposal for an open finance governance framework and will accept feedback from stakeholders until Dec. 23. When approved, the framework will be applicable to BSP-supervised financial institutions, as well as third-party service providers that are either account information service providers and/or payment initiation service providers.
The framework also calls for the establishment of an Open Finance Oversight Committee (OFOC), which will become an industry-led self governing body overseen by the BSP.
Upon creation, the OFOC is expected to come up with its own membership and participation rules, standards, and procedures, while ensuring a non-discriminatory membership that represents key interest areas in the financial industry.
Mr. Villanueva recommended that the BSP designate the initial core members to work on the details of the framework and guide the group through a governance mechanism.
“Since the OFOC is key to the success of the guidelines, it might be fatal if the OFOC is unable to negotiate among its members regarding matters of governance and membership. A starting point which has more details can allow a core group to move quickly to self-organize,” he said.
Mr. Villanueva added that their group believes that a major hurdle to the framework are data privacy laws including Republic Act (RA) No. 1405 or the Deposit Secrecy Law and RA No. 10173 or the Data Privacy Act.
With this, Mr. Villanueva said the OFOC could streamline forms and agreements that member institutions can use to demonstrate their right to share personal data.
“Alternatively, the OFOC and its members can formulate their own industry Privacy Code for approval of the NPC to mitigate the risks associated with the user of personal information by Open Finance,” Mr. Villanueva said.
The BSP is looking at a tiered implementation of the framework based on data sensitivity, data type, and data holder type. — Luz Wendy T. Noble