A newly released AFI video tells the story of Bangko Sentral ng Pilipinas’ (BSP) journey toward pursuing mobile financial services regulation that, though supportive of financial stability, did not infringe upon mobile phone operators’ growth or ability to remain innovative amidst rapidly improving technology.
As detailed in the film, global mobile phone ownership has grown quickly, even amongst populations who make less than USD2 per day or experience limited access to financial services. Today, far more people have phones than bank accounts.
In 2001, Philippine mobile phone operator Smart launched Smart Money, seeking to reach out to this nascent market. At its core, Smart Money enabled transfers between two mobile phones; by 2004, the service was approved and continuing to experience growth.
Soon afterward, Globe, the Philippines’ second largest mobile phone operator and Smart’s direct competitor, launched G-Cash. In addition to making transfers, customers now had the ability to share airtime load and utilize a proxy for currency via their mobile phones. However, G-Cash was a subsidiary of a mobile phone company, not a bank. Thus, though dealing with real currency, G-Cash didn’t fall under BSP jurisdiction.
Faced with the choice of maintaining the status quo or embracing and developing specialized regulation, BSP instituted a specific division to address the unique challenges of mobile and technology offerings. As a result, safeguards were put in place; notably, electronic values had to be matched by real money and deposits brought into the financial system.
BSP continues to innovate with regulation that reflects changing technologies while also maintaining stability in the financial system. As a result of these efforts, rapid growth in the market has existed side-by-side with appropriate regulation. There are now 24 issuers of e-money in the Philippines, including three non-banks, and 53 rural banks now offer electronic banking compared to none in 2005. In 2012, 158 million e-money transactions amounting to PHP 535 billion (over $12.5 billion USD) were conducted.
