Financial Inclusion and Crime Prevention Key Concerns as Digital Banking Rises in the Philippines

As the digital banking landscape continues to evolve in the Philippines, experts warn that unbanked populations can benefit greatly from advances in fintech services and online banking, but these new solutions also pose significant risks. The country’s financial inclusion efforts must address the evolving fraud landscape and ensure that customers are properly educated on how to protect their personal data.

Risks of Financial Inclusion

New Fraud Risks with Fintech Services

As developing countries begin to take financial inclusion more seriously, industry participants must be aware of new fraud risks. According to Dev Dhiman, managing director of Asia Pacific operations for GBG, a fraud, compliance, and digital identity specialist, “as we start to look at less conventional markets for institutions, the fraud risk mutates and potentially becomes more severe.”

Improving Financial Literacy

Customers are Often the Weakest Link in Banking Fraud

Paolo Azzola, chief strategy officer of e-wallet provider PayMaya, emphasized the importance of improving financial literacy. “If you as a customer is willing to give your PIN or password to a fraudster, you’ll also be willing to give your fingerprint and biometrics,” Azzola said.

Addressing the Evolving Fraud Landscape

Leveraging Alternative Data for Financial Inclusion and Credit Access

Ellen Joyce Suficiencia, director of BSP’s financial inclusion office, highlighted the Philippines’ progress in improving financial inclusion, particularly through digital payments and remote account opening. She also stressed that the COVID-19 pandemic has accelerated the trend, making it crucial to address the evolving fraud landscape.

• Leveraging alternative data can be a powerful tool in improving financial inclusion and credit access.
• The BSP’s recently approved Open Finance Framework is an example of this approach.

Digital Solutions for Small Businesses

Importance of Financial Inclusion for Micro, Small and Medium-Sized Enterprises (MSMEs)

Paolo Azzola emphasized the importance of digital solutions for small businesses. “If you’re a micro, small and medium-sized enterprise (MSME), being financially included and getting a financial account through a money issuer, a bank or whoever is the easiest for you, is extremely important,” Azzola said.

Conclusion

As the Philippines continues to promote financial inclusion through digital banking solutions, it is crucial for policymakers and industry players to address the concerns surrounding fraud and data protection. The country’s fintech sector must prioritize the use of alternative data and robust cybersecurity measures to ensure that unbanked populations can benefit from these new solutions without compromising their personal information.