The Philippines’ central bank or the Bangko Sentral ng Pilipinas (BSP) is open to potential investments from Qatar in the field of digital banking and Financial Technology (Fintech), according to a BSP official.
BSP’s managing director, lawyer Arifa A Ala, said the BSP has been open to a number of regulations that accommodate digital transactions not only in the banking industry but also with non-bank financial institutions.
“In fact, in our own strategic planning, we are actually targeting to bring the digital transactions to around 30%,” Ala said during the third leg of the Philippine Economic Zone Authority’s (Peza) virtual ‘Business Continuity Forums’ held recently.
Recognising that “the future of banking is going digital,” Ala said the BSP has a dedicated subsector for Fintech and that it is “strongly supporting” digital banking. In light of the progress the Philippines has made in Islamic banking, she stressed that offering a Shariah-compliant digital solution to the market “will be very attractive.”
Ala’s response during the webinar was related to Philippine Business Council-Qatar (PBC-Q) chairman Greg Loayon’s statement regarding the BSP’s role in promoting Shariah-compliant digital solutions, citing the high remittance volume from Overseas Filipino Workers (OFWs).
The Philippines ranked fourth ($35.1bn) in the World Bank’s top five remittance recipient countries, trailing behind Mexico with $38.7bn, China ($70.3bn), and India ($82.2bn), according to official figures as of October 2019.
Speaking in the context of digital banking, Loayon noted that in many areas of Mindanao “there is a large gap” in terms of access to banking. He stressed that it would be a “good move” to capitalise on the Philippines’ high mobile phone penetration and “marrying that with a Shariah-compliant product.”
“And I think it would be a first for the Philippines, so I am interested to see where the Bangko Sentral ng Pilipinas is with regards to digital platforms because there are investor conversations happening right now in Qatar on digital banking in the Philippines,” Loayon pointed out.
Loayon also asked about a potential collaboration between Peza and BSP on establishing Fintech solutions that could be located inside Peza economic zones but regulated by the BSP.
According to Ala, she also welcomes the suggestion of Peza director general Charito B Plaza to forge a memorandum of understanding (MoU) with the BSP for potential Islamic financial institutions inside Peza economic zones.
“With the recent amendment of the BSP’s charter, the supervised financial institutions of the BSP have expanded to include money service businesses and credit granting entities, among others, so they are under our supervision,” Ala said.