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The Digital Payments Transformation Roadmap 2020-2023 of the Bangko Sentral ng Pilipinas (BSP) achieved its goals of digitising 50% of retail transactions and onboarding 70% of Filipino adults into the financial system by the end of 2023. These efforts have provided secure, accessible financial services to millions of Filipinos.

Looking ahead, BSP’s 2024-2026 roadmap focuses on boosting financial connectivity through initiatives like Open Finance and Project Nexus, aimed at enhancing cross-border payment interoperability in ASEAN. Programmes like Paleng-QR Ph and Bills Pay Ph continue to integrate digital payments into everyday life, supporting financial inclusion for businesses and individuals.

With the Philippine economy projected to grow by 6-7% in 2024, digital banking and financial inclusion are emerging as critical components of growth.

Charina De Vera-Yap, managing director of financial inclusion and consumer empowerment sub-sector at BSP, emphasised the role of open finance in enhancing access for underserved communities. She said, "Our vision is for a more resilient financial ecosystem—one that benefits all Filipinos."

A significant highlight of the digital push is the Paleng-QR PH programme, which has enabled digital payments in public markets. As of September 2024, 132 local government units (LGUs) are participating in the initiative. The Paleng-QR PH was acknowledged by President Marcos during his State of the Nation Address, illustrating how digital payments are reshaping the daily lives of Filipinos.

To bolster financial literacy, BSP has launched the BSP E-Learning Academy (BELA). Set to be fully accessible by mid-2025, BELA aims to provide nationwide financial education through courses on personal finance and economics. De Vera-Yap anticipates that "the impact of this initiative will be evident by the second quarter of 2025, as more Filipinos gain confidence in managing their financial well-being."

To further enhance consumer trust, the BSP has introduced the Anti-Financial Account Scamming Act (AFASA), aimed at penalising money muling, social engineering, and economic sabotage. This legislative move is seen as a proactive measure to safeguard consumers as the financial landscape becomes increasingly digital.

BSP reaffirms its commitment to supporting the Philippine Statistics Authority (PSA) in printing national ID cards as part of the Philippine Identification System (PhilSys) project. This initiative aims to streamline the production process and enhance citizens' access to essential services.

Collaborative efforts for a resilient financial future

Ongoing collaboration with the Department of Finance (DOF) focuses on improving open finance frameworks and providing tailored financial services to micro, small, and medium-sized enterprises (MSMEs) at reduced costs. She said BSP governor Eli Remolona highlighted the importance of resilience against environmental risks, stating, “Climate change is the ultimate risk, and financial resilience must be strengthened to manage environmental and social risks.”

BSP's wholesale central bank digital currencies (wCBDCs) known as Project Agila, aims to enhance the large-value payment system by testing interbank transfers outside business hours. Participating banks include BDO, China Bank, Land Bank, RCBC, UnionBank, and Maya Philippines.

Eugene S. Acevedo, president & CEO of Rizal Commercial Banking Corporation (RCBC) and first vice president of the Bankers Association of the Philippines (BAP), reiterated the need to pair technological advancements with investments in human capital. “It’s the people behind the technology that matter most. Digital transformation demands investment in both technology and human capital, ensuring that our best digital and AI-enabled talent remains our greatest asset,” he noted.

International interest in the Philippines is burgeoning as the nation innovates in cross-border payment solutions. Sonja Davidovic, advisor at the Bank for International Settlements (BIS) Innovation Hub introduced Project Nexus, a multilateral solution designed to tackle challenges in cross-border payments. She explained that “Nexus addresses the entire value chain and aligns with the G20’s goals for enhancing global payments.”

With ongoing projects like Project Dunbar, Project Mariana, and Project Rialto exploring CBDCs, tokenised foreign exchange trading, and interconnected payment systems, the potential to revolutionise global finance is significant.

Project Dunbar explores multi-CBDC platforms for international settlements, while Project Mariana focuses on cross-border CBDC exchanges via automated market-makers (AMMs), advancing tokenised FX trading. Project Rialto integrates wholesale CBDC settlements into instant payment systems.

Project Mandala will embed regulatory compliance into a shared protocol layer across payment systems, reducing transaction failures, intermediaries, and improving transparency and speed. It works with Swift for enhanced global efficiency.

As the Philippines embraces digital banking and financial inclusion, the collaborative efforts of regulators, banks, and international partners are set to shape a more inclusive and interconnected financial future for all Filipinos

Evolution of financial services through personalisation

In the leadership dialogue, technology experts discussed the evolution of financial services in the Philippines through increased use of data and artificial intelligence (AI) to personalise offerings.

Lito Villanueva, executive vice president and chief Innovation and inclusion officer at RCBC, highlighted that the shift to digital transactions in the Philippines has exceeded expectations, with more than half of retail transactions digitised by 2023, although the goal of integrating more of the adult population into formal financial systems remains a challenge.

He also emphasised the potential benefits of Project Nexus for the Philippines, particularly given its large overseas workforce of around 14 million.

Villanueva said, “Definitely we are looking forward to Project Nexus implementation because it has been in discussion for the last three to four years, and it was of course initiated by the MAS (Monetary Authority of Singapore). It’s a good thing that out of the 10 ASEAN members, around five are engaged with that: Bank of Thailand, BSP, Bank Negara, MAS, and Bank Indonesia.”

Robert Paguia, data protection officer at government-run Cybercrime Investigation and Coordinating Center (CICC), raised concerns about AI-driven personalisation, stressing the importance of safeguarding sensitive customer data, which remains a barrier to banking for many Filipinos

He said, “As it is, the main consideration that is preventing all Filipinos to be part of the financial system is the fear that their personal information would not be protected by financial institutions. But banks are already transitioning to protecting the personal information of their clients and ensuring that cybersecurity is also embedded in the technologies they are rolling out.”

As countries design frameworks to regulate the use of AI on financial services, Davidovic pointed out the difficulties in navigating data regulations globally, advocating for a balanced compliance approach without expecting universal harmonisation.

She said, “We are faced with data localisation issues and disparate data regulation across jurisdictions. We have to find the right way to balance that. We cannot expect that every jurisdiction will harmonise their regulatory frameworks to come to a common global standard anytime soon. And, I don’t think that is even advisable because data legislation is a product of a country’s culture and historical context.”

This is where BIS’ Project Mandala comes in, said Davidovic, as it automates compliance procedures across jurisdictions. “It’s not always going to be a one size fits all approach. We have to think about it in a decentralised fashion. And this is why Project Mandala can be helpful because we designed something that doesn’t change regulation.”

The discussion also touched on the transformative potential of tokenisation in the Web3 economy, with Paguia noting the need to properly engage the unbanked in the use if this emerging technology.

Davidovic suggested that CBDCs could bridge gaps in access to financial services through the use of conditional government transfers to people in need but live in far-flung communities

Villanueva also highlighted the thriving collaborations between banks and fintechs to enhance service delivery in the Philippines, while Paguia called for a unified national approach to building cyber-resilience through public-private partnerships.

 

financial growth, financial inclusion, open finance, digital payments, financial literacy, BSP E-Learning Academy, Anti-Financial Account Scamming Act, project agila, wholesale CBDCs, digital payments transformation roadmap, project nexus, project dunbar, project mariana, project rialto, tokenisation, AI personalisation, Digital Transformation, Cross-Border Payments, Cybersecurity, Compliance