Fintech sector eyed as recovery driver

More policy reforms should be implemented for financial technology (fintech) to propel the industry as a driver of the country’s economic recovery and resume its stalled growth.

“Fintech will help us recover from this crisis,” said Albay Rep. Joey Salceda, co-chair of the House economic recovery cluster.

“But we have to set the policy reforms, which I am pushing for, and provide the infrastructure backdrop for the sector to grow. It has been around two decades since the Arroyo administration essentially built the BPO (business process outsourcing) sector. Fintech could be the legacy industry of this administration.”

“There are already fintech hubs in the country, but they’re complaining that internet is very expensive in the country. I’m working on it as well,” said Salceda, who also chairs the House ways and means committee.

Fintech refers to the integration of technology into financial services companies and the Philippines has been ranked high among 55 countries in its efforts to improve financial inclusion.

The Bangko Sentral ng Pilipinas said the country ranked second in Asia and eighth worldwide in the Global Microscope 2020 of the Economist Intelligence Unit, the research arm of The Economist Group.

Salceda said the country could leverage the progress it was making in financial inclusion through comprehensive banking reforms.

“One, more credit. Credit growth is still slow, despite the efforts we’ve made to lower interest rates. Two, more financial technology firms. That’s what we’re trying to do with comprehensive banking reform,” he said.

“A more financially inclusive society means you can develop more sophisticated products and services. That’s the motherlode for any fintech firm,” Salceda said.

A technical working group was created under the House banks and financial intermediaries panel in November to consolidate comprehensive banking reform bills, most of which were authored by Salceda.

These include House Bill No. 5913, or the Virtual Banking Act, which encourages new virtual banking players and provides a framework that would encourage traditional players to participate;

HB 7760, or the Financial Technology Industry Act, which pushes for the development of new financial technologies in the country;

HB 7864, or the Blockchain Technology Development Act, which encourages the study and application of distributed ledger technology to make services cheaper and more efficient;

HB 7863, or the Fair and Inclusive Credit Reporting Act, promotes credit transmission to previously underserved sectors, by encouraging the use of “big data” to improve credit risk assessment and relationship management.