The hypergrowth that is being triggered by Open Finance in the Southeast Asian economies must be balanced with consumer advocacy, customer privacy, and data security.
This technological and economic equilibrium can encourage the business community to explore the advantages of digital technologies and online transactions while allaying the concerns of millions of users about their vulnerabilities, risks, and cybercrimes.
This was the highlight of the panel on Open Finance technology during the recently held World Fintech Festival Philippines 2021, where the National Privacy Commission, Southeast Asian Open Finance technology provider Brankas, part of the Inclusive Fintech 50, and other fintech companies discussed the creation of a more secure and safer financial ecosystem in the country.
Hosted by John Aguilar of the Final Pitch, these distinguished panelists came together to discuss how APIs and Open Finance can enable the future of the financial ecosystem of the country: NPC Commissioner Raymund Liboro; Todd Schweitzer, CEO of Brankas; Fred Levy, Chief Commercial Officer of GCASH; Nauman Mustafa, CEO of Coins PH; and Victor Paterno, President and CEO of the Philippine Seven Corporation.
Advantages of secure data
Schweitzer started the panel by pointing out one trend that industry players should follow: “Something exciting is happening in Southeast Asia and the Asia Pacific generally. It is the decoupling of financial services powered by APIs which really is the future, as it enables us to connect to other apps and different over-the-counter solutions across all platforms.”
API or Application Programming Interface is the software “middleman” that links apps and other tech solutions together to communicate and interact with each other.
Brankas is among the top 50 global fintech startups selected by the Inclusive Fintech 50, which enables financial inclusion for the underbanked segments in developing nations. Schweitzer remarked that these segments in most emerging SEA nations need more platforms to give them financial access while the need for a more reliable, up to date credit bureau in their locations is evident. As a result, lenders need to create from ground up the profiles of their consumers; due to the lack of capabilities in evaluating risks for consumers because of poor data, the loan companies charge the borrower more than 20% of the usual monthly fees to mitigate their own risks.
To empower borrowers in the Philippines and SEA, Schweitzer suggested the use of secure data portability that can share their data from other providers, while helping to create an open-banking environment for the nation.
When it comes to public information security in a digital setting, Commissioner Liboro elaborated on what governments are doing: they are technology-neutral and constantly remind fintechs about their obligations in protecting consumers and citizens. He reiterated the importance of customer trust and the legal elements that generate it: adhering to general data and the privacy principles of transparency, purpose, and proportionality.
Levy also commented on the advantages brought by fintech institutions: the access to more data, the extraction of insights increasing the accuracy of the consumer profile, and greater financial access to some users who receive limited assistance from the traditional financial institutions.
Mustafa said algorithms are a digital tool that can make financials more inclusive: "It allows us better decision-making to some extent as far as lending is concerned.”
Paterno, who acknowledged that companies found it difficult to lend in the Philippines “without your own collectors,” also says his company keeps track of their behavior using algorithms.
Customer privacy and protection
Meanwhile, Levy commented on how companies can use data to reduce the lending risk for customers: “Start customizing the loan for the consumer. Make sure that you borrow money at the right amount, at the right rates.”
Commissioner Liboro emphasized the developments that will enable cooperation between regulators and the fintech companies that will drive their joint future goals. “We are for the promotion of financial technology that is inclusive but at the same time trusted.”
The hypergrowth of fintech and open finance will continue, as Schweitzer observed the trend that is happening in the Philippines and Asia: “the unbundling of financial services from where they are accessed.” He stressed the shift from traditional banking towards the different fintech solutions, enabling accessibility for all markets across the region in the future.
Amor Maclang, Convenor of Digital Pilipinas and WFF – PH, emphasized that Open Finance and Fintech will put the Philippines on the global map through collaboration and API adoption, as it moves towards a more digital-enabled economy.