– 6 July 2020 – Union
Bank of the Philippines
 (UnionBank) recently hosted a digital fireside
chat on “Transformational Regulatory Change to Accelerate Innovation”
with the Philippine Central Bank Governor Dr. Benjamin Diokno and Monetary
Authority of Singapore (MAS) Chief FinTech Officer Sopnendu Mohanty, moderated
by UnionBank Vice-Chairman Dr. Justo A. Ortiz.


The special hour-long discussion touched on various topics
including open banking, the National ID system, blockchain and central bank
digital currency among others. Governor Diokno and Mr. Mohanty also discussed
the regulatory frameworks in the Philippines and Singapore respectively,
highlighting the need for a sandbox approach when dealing with emerging


“Regulation and innovation – they sound like an
oxymoron. For a long time it may have been the case but it is no longer,”
said UnionBank Vice Chairman Justo Ortiz.


Ortiz opened the session by recalling how compliance with
regulatory requirements paved the path for UnionBank’s transformation journey,
showing how regulators can often be catalysts for innovation. “The only
way to handle the compliance requirements in a sustainable, effective and
timely way was to digitize our processes so that we could acquire, store,
access and report the data in the various cuts the regulators want to see, and
that went into our strategic planning exercise,” Ortiz shared.


Central Bank Governor Benjamin Diokno recognized the crucial
role of technology in revitalizing the economy amidst the ongoing COVID-19
crisis. He emphasized that the Central Bank’s prioritizes support for banks and
financial institutions so that these can deliver financial services to the
public using innovative technology.


With this, the Governor shared three principles to foster an
environment conducive to innovation. First, regulations have to risk-based,
proportionate and fair. Second, there has to be active multi-stakeholder
collaboration. Lastly, innovations should benefit consumers, especially the
most vulnerable and those availing of financial services for the first time.


Governor Diokno shared an overview of the Philippine Central
Fintech Roadmap which focuses on proportionality of regulation based on risk
profile and systemic importance. He also discussed improving Central Bank’s
capabilities through regulatory and supervisory technology such as AI and
predictive analytics. Finally, Governor Diokno highlighted the importance of
open collaboration between financial regulators and fintech players and
providing a flexible test and learn” environment to engage and
oversee fintech innovators. UnionBanks i2i, which connects rural banks through a
blockchain-based network, was cited as one of the successful initiatives born
out of the Central Banks test and learn approach.


MAS Fintech Chief Sopnendu Mohanty shared his view on what a
post-COVID19 economy will be like and gave insights on what regulators should
look into to respond and adapt to this new normal.


He mentioned that the pandemic has affected businesses in
two ways: first, it shifted the focus of digitalization from efficiency and
productivity to resiliency and sustainability, and second, it accelerated the
digitalization of all processes. According to Mohanty, this new digital normal
will make economies more open, connected and interoperable. However, regulators
must embrace progressive policies for this to happen.


Mohanty emphasized the need for National Digital
Infrastructure which lays the foundation for fintech capabilities such as the
National ID, eKYC and seamless payment facilities. He also noted the need for
trusted data exchange at the national level.


Another key component of a connected financial services
ecosystem is open Application Programming Interfaces (APIs) which can be
accessed and consumed by financial institutions and fintechs. According to
Mohanty, this is the first step to open banking and allows more seamless data
accessibility among institutions, thus leading to better financial products and
services as well as inclusive prosperity.


Lastly, Mohanty echoed the principles raised by Governor
Diokno such as the need for a collaborative mindset and implementation of
balanced and agile regulations. He also noted that an environment conducive to
experimentation and collaboration, matched with regulation that adapts to
ever-changing scenarios, can bring forth transformative innovations that
benefit economies.


The fireside chat was part of UnionBank’s Tech Up 0-1-2-3
webinar series, co-organized with the Fintech Philippines Association, the
Distributed Ledger Technology of the Philippines (DLTAP), Tech Up Pilipinas,
Philippine Fintech Festival, UnionBank GlobalLinker and UBX.