In one of the financial inclusion conferences I attended last year, an audience member, a former government employee, asked one of the panel speakers if they could just give out at least basic internet-connecting phones to people in ultra-poor communities in the country to help improve their financial well-being and enable them to access digital finance products and services, since the company the speaker belongs to “has a lot of money.” The panel speaker from the private sector respectfully responded with more questions: “Do we have sufficient support infrastructure in those communities to ensure that their devices can receive messages and connect to the internet?” She then sort of closed that portion with another question: “Won’t they just sell these mobile devices in exchange for food or medicine, which might be what they are in dire need of before even thinking about access to digital finance services?”
While we talk about generative artificial intelligence, intelligent phones, and cryptocurrencies, many Filipinos are left without basic savings accounts or access to sachet credit for their consumption and, potentially, growth. Only 1,380 cities and municipalities in the Philippines have banking presence as of 2023 Q1; that is even down by 1 compared to 2022 Q1 per Bangko Sentral ng Pilipinas (BSP) data. As of 2021, 49 percent of Filipinos aged 15 and above still do not have formal personal finance accounts, per World Bank Findex. Only 37 percent have savings accounts. Aside from the bank account opening matter, access to instruments that help plant growth and development in people and organizations, such as credit and investments, are still in dire need of improvement. Particularly on the credit side, more
than half (57 percent) of adults with outstanding loans borrowed from informal sources, per BSP data. With these issues, our country seems to have been facing not just income inequality, but financial services access inequality as well.
Open Banking, a mechanism where financial institutions share data with third parties possibly through application programming interface (API) according to The Investopedia Team (2022), began the open innovation and open finance concepts. The BSP defines Open Finance as “leveraging on and sharing of customer-permissioned data among banks, other financial institutions, and third-party providers to develop innovative financial solutions, such as, among others, those that provide real-time payments, promote greater transparency to account holders, and provide marketing and cross-selling opportunities to banks, other financial institutions, and TPPs” (TPP means “third-party providers”).
Image Source: Bangko Sentral ng Pilipinas (2024). https://www.bsp.gov.ph/Pages/InclusiveFinance/Open%20Finance/Open%20Finance.aspx (accessed on April 9, 2025).
The Open Finance Framework (OPF) (Circular 1122) was released by the BSP in 2021, highlighting digitalization for improved financial inclusion. The OPF has communicated well-established roadmaps for financial services evolution that enhances payment transactions, makes transfers more cost efficient, and surfaces other means to transact even for those without formal bank accounts. However, there is still a lot that both the private and the public sectors need to work on and address to fully implement the OPF and realize its maximum benefits.
Stakeholder willingness and readiness
The leading government agency for OPF, the BSP, displays its openness to collaboration in the detail of the policy which pertains to the Open Finance Oversight Committee (OFOC) in the “Governance Framework” section of Circular 1122. The OFOC is identified to be industry-led and self-governing. In the same section of the circular, paragraph “c.1.”, non-BSFIs (those financial institutions not supervised by the BSP) are included. Moreover, paragraph “d” clearly calls to all stakeholders to “[c]ooperate with and extend fullest assistance permissible to the Bangko Sentral and other regulators in enforcing applicable laws and regulations, in promoting adherence to this framework.”
Applying the Expectations-Confirmation Theory (ECT) as her framework to scrutinize the OPF, Jinky Dela Torre, a researcher from the De La Salle University and a bank officer at China Banking Corporation, posits that regulators and institutions involved in the implementation of the OPF should keep in mind the contextual, cultural, and technological readiness of the people in comparison to other countries on several factors and dimensions to potentially tailor its implementation. Nonetheless, there are more parties in the OPF aside from the government.
On the consumers’ side, they are more inclined to explore digital finance when they have a higher level of education on top of other factors, according to a study by Manuelito Co and Dave Centeno in “Effects of Filipino Consumers’ Financial Attitudes, Subjective Norms, and Perceived Behavioral Control on Intentions to Formal Banking: Towards Financial Inclusion.” The consumers’ party needs to be willing, cooperative, and knowledgeable too to effectively play its part.
But the OPF doesn’t benefit just the consumers alone; institutions gain by being able to offer more products and services to consumers too, through this framework. However, based on my personal experience working with other finance institutions, many need to be more willing to share data with other entities for improved efficiency. While financial consumers are currently empowered to share their data among institutions, doing so still takes so much effort—from the manual interventions to the manual forms they have to fill out just to get their consent sent across when needed.
Nevertheless, we must remain hopeful, and the trends support our hopes. “The support of finance institutions for one another and from the government has been instrumental to the recent advancements in financial systems in our country,” said Eillen “Apples” B. Mangubat, former president of the Philippine Finance Association. “We expect more and stronger collaborations in the future, and that will further improve the state of financial inclusion in the Philippines,” Mangubat added.
Technology and infrastructure
Thinking about the stakeholders, I became more concerned with the public sector—is the government ready? One can easily check out the PH government’s sites and systems to be able to judge how we are doing in that area, especially when you compare those with the tools used by private companies. And in finance, BSP is not the only government body that needs to participate in and for the OPF; we need the cooperation of the education department, the trade department, and the information and communications technology department, among others.
Eduardo Junio Andaya, Russel John Orlina, and Ramil Ilustre, in their study “Digital governance in the Philippines: a scoping review of current challenges and opportunities,” found that in order to harness the transformative power of digital governance, stakeholders need to address the digital divide, promote digital literacy, strengthen institutional capacity, and foster a culture of innovation and cooperation.
Thankfully, the need for improvement is not just acknowledged but also leveraged for innovation in the circular’s (the OPF’s) “Regulatory Sandbox” section, which states that the BSP “seeks to provide a regulatory environment that is conducive for the deployment of innovative financial services…”
Much still needs to be done on the infrastructure side, though much has been achieved as well in recent years. From just 11 percent in 2019, the percentage of mobile phone and internet users who had online financial transactions has increased to 60 percent in 2021—a huge jump through the pandemic lockdowns. Unfortunately, 68 percent of those with mobile phones and internet remain unbanked, as of 2021, according to BSP data.
The finance industry needs to improve on technology as well, not just in quantity, but in quality too. “We already know that technology helps increase speed and make processes more efficient,” shared Robert B. Jordan Jr., Chief Executive Officer (CEO) of the Asialink Group of Companies. “But finance institutions must ensure that it [technology] also improves the quality of products and services, and data security for the consumers as well,” Jordan added.
Financial consumer welfare
Of course, the OPF was built with financial consumers as the main beneficiaries. But could it really bring them (us) more good than harm? One of the challenges identified by Dan Awrey and Joshua Macey in “The Promise and Perils of Open Finance,” is the “thorny technical challenges” mainly around giving and obtaining consent from financial consumers. The technology that enhances the collection and movement of data could also predispose consumers to higher privacy and security risks.
This challenge is common in open finance, even in other countries. Federico Ferretti and Peter Petkoff, in their study “Open finance and consumer protection: uneasy bedfellows,” noted that addressing legal uncertainties and effective supervision and enforcement of the framework in digital domains can aid in making the OPF improve financial inclusion even further.
The PH OPF circular itself ensures foundational consumer protection through its “Consumer Protection” section (“Participants shall adopt customer awareness measures to, at the minimum, educate their customers…”) and “Data Privacy and Data Protection” section (“…and that they have all the rights enumerated under R.A. No. 10173 [Data Privacy Act of 2012]”). More importantly, it detailed the need to secure consent among consumers and participants through the “User Consent and access to opt-in and opt-out mechanisms” section.
“Regulations and regulatory frameworks, such as the Open Finance Framework (OPF), are typically refined over time to address emerging changes and incorporate lessons learned from previous implementation phases,” stated Alden Ejorango, bank officer at the BSP Technology and Digital Innovation Office (TDIO) and adjunct faculty for Fintech Regulations at the Asian Institute of Management (AIM). He further emphasized, “Despite these adjustments, the OPF remains committed to reducing friction and streamlining the onboarding process for both the banked and unbanked populations.” In line with this statement, Circular 1122, in the “Adoption of Open Finance Standards and Publication of Open APIs” section, further states that “Open Finance Standards may be revised periodically to address emerging issues or to improve the Open API functionalities.”
Forward and up
No policy and project implementation is easy, yet nothing is impossible if we put all our heads and hearts toward our good and the good of future generations. We must strike a balance when it comes to addressing financial inclusion issues to make sure that no one is left behind, technically (infrastructure-wise) and literacy-wise. On top of the usual public-private partnership efforts and all the aforementioned solutions aligned in the findings from related literature, we can also explore the following action items to help improve financial inclusion in our country:
Provide feedback. We can help the regulators and cooperating associations by giving timely and objective feedback, especially when it comes to impact on businesses and customer satisfaction. Finance companies can share their anonymized data with the OPF community for further studies and discovery sessions so that progress is also checked regularly industry-wide. Related associations, like the Fintech Philippines Association, can include this in their charters for their members for better monitoring and consequent implementation.
Build capacities. No single entity can put the OPF on the pedestal alone. And more people and organizations can help if they are also empowered and equipped to collaborate. Private banks and nonbank financing institutions can be made more aware of the purpose of the OPF through open discussions and calls for comments. Companies with lagging technology may be invited to fintech discovery events—these companies will influence not just their employees and principals but their customers as well. Even teachers in primary education must be taught in this area so they can educate their pupils about the importance of financial inclusion and the different financial instruments they can use.
Start early. Discussions on financial tools and personal finance must be started early, from grade school, officially, at home, even. Teaching kids the simple use of digital wallets and responsible consumption are essential parts of financial literacy. The OPF may be updated to include this early education component. More importantly, the efficiency in transactions should better involve children, e.g., it should be easier for them to transact albeit with necessary restrictions. Allowing them to easily open savings accounts is a good example of this inclusion early on.
Democratize insights for consumers. Currently, data are processed (and insights are analyzed) by parties on the receiving side, whether public or private, for their benefit, i.e., to offer more services, but not so much on the consumer side. Although consumers are the owners of their data, individuals lack the capacity and/or technology to crunch their numbers on their own, making insights or decisions influenced by whichever has the capacity to analyze consumer data—in most cases, those are the finance companies. While this can be challenging, the government may explore subsidized portals, for example, where financial consumers can enter (and delete) their ported data on their own to do private analyses.
Aside from the financial inclusion statistics, the human development index might also be indirectly influenced by improved financial literacy and more open banking and financing. Someone who is financially healthy can be physically healthy as well. Our adoption of Open Finance is a good start, and so we must persist to continue, and to consequently contribute to the achievement of the United Nations (UN) Sustainable Development Goals (SDG) of No Poverty, Reduced Inequalities, and Partnerships for Goals.
