Department of Finance (DOF) secretary Carlos Dominguez III underscored in a statement on Thursday, Jan. 10, the need to put in place a liberal regulatory environment to enable financial technologies (fintech) to help Filipinos ride the digital wave.
In a meeting held recently with officials of the International Finance Corp. (IFC), Dominguez likened fintech in the Philippines to a “seed starting to grow,” and that can only sprout if it is unfettered by regulations.
“Let’s not choke it with regulations. Let them grow, make mistakes. Then we learn how to regulate them,” Dominguez said, as he pointed out that these new financial technologies are crucial for the government’s goal of financial inclusion.
The 2017 Financial Inclusion Survey of the Bangko Sentral ng Pilipinas (BSP) showed that only 22.6 percent of the total adult population in the country, or about 15.8 million Filipinos, have bank accounts, leaving the majority — 52.8 million — unbanked.
Dominguez said the government is planning to apply fintech in organizing the country’s first Overseas Filipino Bank (OFB) that caters to its citizens overseas, by converting it into a fully digital bank using mobile technologies rather than having physical branches to serve its clients.
He has asked the IFC for assistance in implementing this plan.
Led by its CEO Philippe Le Houérou, the IFC assured Dominguez that the institution will support the government’s efforts in attaining financial inclusion through the use of digital technologies.
“We are with you, to improve the way we work together on Fintech, and more broadly, financial inclusion,” Le Houérou said.
Other IFC officials at the meeting were Vivek Pathak, regional director for East Asia and Pacific; Jane Xu, country manager for the Philippines; Val Bagatsing, principal investment officer, East Asia and Pacific; and Nicolas Marquier, adviser to the CEO. Mara Warwick, World Bank country director for the Philippines, Thailand, Malaysia and Brunei was also present.
In the meeting, Dominguez also expressed concern over the emerging threat of disruptive technologies such as robotics and artificial intelligence on the country’s dollar-generating information technology-business process outsourcing (IT-BPO) industry, and asked the IFC for assistance in identifying and developing new industries to help transition workers in this sector to new jobs under the so-called Fourth Industrial Revolution.
Dominguez noted that the IT-BPO sector earns about $30 billion a year in revenues and employs around 1.2 million Filipinos. “Our threat is not really from India, but from the rapid changes in technology,” Dominguez said.