SINGAPORE - MediaOutReach - 6 July 2020 - UnionBank of the Philippines (UnionBank) recently hosted a digital firesidechat on "Transformational Regulatory Change to Accelerate Innovation"with the Philippine Central Bank Governor Dr. Benjamin Diokno and MonetaryAuthority of Singapore (MAS) Chief FinTech Officer Sopnendu Mohanty, moderatedby UnionBank Vice-Chairman Dr. Justo A. Ortiz.

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

"Regulation and innovation - they sound like anoxymoron. 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 withregulatory requirements paved the path for UnionBank's transformation journey,showing how regulators can often be catalysts for innovation. "The onlyway to handle the compliance requirements in a sustainable, effective andtimely 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, andthat went into our strategic planning exercise," Ortiz shared.

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

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

Governor Diokno shared an overview of the Philippine CentralBank'sFintech Roadmap which focuses on proportionality of regulation based on riskprofile and systemic importance. He also discussed improving Central Bank'scapabilities through regulatory and supervisory technology such as AI andpredictive analytics. Finally, Governor Diokno highlighted the importance ofopen collaboration between financial regulators and fintech players andproviding a flexible "test and learn" environment to engage andoversee fintech innovators. UnionBank's i2i, which connects rural banks through ablockchain-based network, was cited as one of the successful initiatives bornout of the Central Bank's test and learn approach.

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

He mentioned that the pandemic has affected businesses intwo ways: first, it shifted the focus of digitalization from efficiency andproductivity to resiliency and sustainability, and second, it accelerated thedigitalization of all processes. According to Mohanty, this new digital normalwill make economies more open, connected and interoperable. However, regulatorsmust embrace progressive policies for this to happen.

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

Another key component of a connected financial servicesecosystem is open Application Programming Interfaces (APIs) which can beaccessed and consumed by financial institutions and fintechs. According toMohanty, this is the first step to open banking and allows more seamless dataaccessibility among institutions, thus leading to better financial products andservices as well as inclusive prosperity.

Lastly, Mohanty echoed the principles raised by GovernorDiokno such as the need for a collaborative mindset and implementation ofbalanced and agile regulations. He also noted that an environment conducive toexperimentation and collaboration, matched with regulation that adapts toever-changing scenarios, can bring forth transformative innovations thatbenefit economies.

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