digitizing the financial ecosystem policies that encourage digital transactions
TRANSCRIPT
Digitization of Financial Ecosystem
The AFI Network
• Founded in September 2008, AFI is a global network of policymakers in emerging and developing countries
• AFI is dedicated to accelerating the adoption of innovative financial inclusion policy solutions with the ultimate aim of making formal financial services more accessible and useable to the billions of unbanked people
• AFI provides members with the tools and resources to share, develop and implement their knowledge of cutting-edge policies
Bringing smart policies to life
Bringing smart policies to life
Financial Inclusion Policy Trends
1. Technological innovation to reduce cost of delivery and increase access on a large scale (Banking Beyond Branches)
2. Proportionate financial sector policy and regulation is critical enabling factor (Proportionate Regulation)
3. Quality aspects of financial Inclusion (Consumer Protection)
4. Increased importance of data to make informed policy decisions (FI Indicators)
5. Coordinated national strategies for financial inclusion (National Strategies)
Bringing smart policies to life
The Philippine Experience
“Effective access” - financial services are appropriately designed, of good quality, relevant for actual use, and beneficial to the target market
“Wide range of financial services” - full set of basic services (savings, credit, payments or remittance, insurance) for different market segments, especially the unbanked
• A state wherein there is effective access to a wide range of financial services for all Filipinos
Bringing smart policies to life
The Philippine Experience
• Access to financial services empowers the poor to manage their finances and reduce their vulnerability to financial distress, debt and poverty
• Inclusive finance supports broad-based economic development that can contribute to inclusive growth in the country
• Illustrative example: microfinance loansSmall amountsSimple
requirementsTypically unsecured
LENDS
PAYS
Frequent amortizations
Payment based on cash flow and client capacity to pay
money into business
increase in household
income
improved quality of life
Provides other services(e.g., deposit, insurance)
aside from loans
profit
Bringing smart policies to life
CHALLENGESAML Compliance
Consumer Protection
Risk Management Process
Applicable Laws/Regulations
Distribution Network
Capacity Building
The Philippine Experience
Bringing smart policies to life
The Philippine Experience
E Money
Issued against receipt of funds of
an amount not lesser in value than the monetary value
issued
Electronically stored in an
instrument or device
Accepted as a means of payment by persons other than the issuer
Issued in accordance with BSP Circular No.
649 dated 9 March 2009
Withdrawable in cash or cash equivalent
Purchase of Goods
ACCREDITED REMCO
OUTLET
Remittance
Payment of Fare
Banking Products- Deposits- Loans- Bills Payment
Utility Bills Payment
Payment of School Fees
Payment of Taxes,
Licenses, Other
Government Services
Person-to-Person
Transfer
Financial Stability
PriceStability
EfficientPayment System
-11h -10h -09h -08h -07h -06h -05h -04h -03h -02h -01h00h
+01h +02h +03h +04h +05h +06h +07h +08h +09h +10h+11h
Philippine Vision for Digitization of Financial Ecosystem
Payment Salaries and
Benefits
Bringing smart policies to life
The Philippine Experience
BSP CIRCULAR 704 – Electronic Money Network Service Providers (EMNSP)
Stressed the need for Due Diligence and Continuing Operational Review
Smaller banks aiming to be EMIs can engage services of EMNSP
Extends mobile financial services distribution thru larger network without incurring huge costs
Bringing smart policies to life
RBAP/MABS - GCash Mobile Banking Service
• Txt-a-Payment
• Txt-a-Deposit
• Txt-a-Withdrawal
• Txt-a-Sweldo
The Philippine Experience
Bringing smart policies to life
• BPI Globe BanKO
• Joint venture of Globe Telecom, Bank of PI and Ayala Corporation
• Offer branchless banking via platform and cash in/cash out agents of MNO
• Offer savings and insurance products
Rationale: technological innovation to reduce cost of delivery and expand access and usage on a large scale
The Philippine Experience
Bringing smart policies to life
Proportionate Regulations
• Allows non-banks to be e-money issuers • Allows cash-in/cash-out via agents • Tiered KYC requirements • Outsourcing of KYC to 3rd parties
The Philippine Experience
Bringing smart policies to life
Wider Range of Products Microenterprise Loans, Micro-deposits , Microinsurance, Micro-agri Loans, Microfinance Plus, Housing Microfinance
Expanded Physical Network Opening of Micro-banking Offices
(MBOs)
Expanded Virtual Reach E-money Issuers E-money Network Service Providers
Lower Barriers to Customer Acquisition
Updated Anti-Money Laundering Rules
Policy and RegulationPolicy and Regulation
Informed and Protected Consumers
Comprehensive Financial Inclusion Data Framework
Enhanced Internal BSP Capacity
The Philippine Experience
Bringing smart policies to life
The Philippine Experience
Impact of Digitization on Domestic Remittance Transactions
• Increased competition that results to lower cost of services• Illustrative example: domestic remittance
Amount for remittance: PhP 1,500
MNO Subsidiary
Pawnshop Remittance Company
Bank
Remittance fee PhP 11 PhP 80 PhP 120 PhP 150
% of PhP 1,500 0.7 % 5 % 8 % 10 %
Note: Costs are indicative market rates (e.g. average cost charged by at least 2 providers)
