• IN THE FACE OF GLOBAL COMPETITION, CYBER CRIME, MONEY LAUNDERING

    PH banking gets its act together

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    THE Philippine banking sector is in the center of a system-wide shake-up. With the onset of the economic integration of the Association of Southeast Asian Nation (Asean), the Bangko Sentral ng Pilipinas (BSP) is compelled to consolidate the local banking industry. To achieve this, the BSP is encouraging more stable local banks to absorb smaller rural lenders, while it opens up the banking sector to foreign players. The BSP is also making sure the local banks are sufficiently capitalized and liquid or have enough cash at any given time.

    An overarching question now is whether the Philippine banking sector is prepared for the deluge of foreign competition. A couple of years ago, the Philippine government passed into law Republic Act 10641, which allowed full entry of foreign banks into the country.

    “Bankers can already feel the competition,” notes Philippine National Bank chairperson Florencia Tarriela, saying the Philippine banking sector does not have to wait for 2020 to start getting its act together.

    Another matter of concern is financial inclusion. Philippine banking is faced with the challenge of how to reach out to more Filipinos and local businesses.

    Central bank data show that only three in 10 Filipinos have bank accounts and most do not have access to bank credit. According to World Bank’s Philippine Financial Capability and Inclusion Survey 2015, Filipinos are more likely to use informal credit and saving services than formal financial services.

    Cyber security is another serious issue that the Philippine banking sector is facing, especially in light of recent news of international money laundering schemes that unfortunately put the local banking sector in a precarious state. This actually sends ripples to all sectors of the Philippine society, especially the overseas Filipinos who send hard-earned money to loved ones back home, businesses that have to transact with entities abroad, and the working class that struggles to save and trusts the banks to protect and grow their money.

    The Manila Times’ 4th Business Forum on June 22 at the Marriott Hotel Manila aimed to shed light on these pressing issues. Aptly titled “Philippine banking: Does size matter? How to survive the tide of competition, cyber threats, and money laundering,” the forum succeeded in threshing out ideas and solutions from stakeholders.

    The forum’s keynote speaker, IBM Philippines President and Country General Manager Luis Pineda, summed up what Philippine banking ought to do—and fortunately, is now trying to do—to survive the tide of competition, cyber threats, and money laundering, whatever their size: the exercise of the timeless Filipino virtue of Bayanihan, or simply, cooperation.

    It turns out, too, that Philippine banking can play David against Goliath, which is not exactly the foreign competition, but the intangible Dark Web, where organized cyber criminals lurk, ready to attack unsuspecting and unprepared entities.

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