Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
TWENTIETH CONGRESS

First Regular Session

HOUSE BILL NO._794

INTRODUCED BY REPRESENTATIVE JURDIN JESUS M. ROMUALDO

EXPLANATORY NOTE

The Philippine banking sector serves as a vital backbone of the national economy—
facilitating financial transactions, supporting enterprise growth, and promoting inclusive
development. In recent years, however, the sector has been undergoing substantial
transformation, spurred by rapid technological advancements, shifting consumer
behavior, and evolving regulatory landscapes.

The COVID-19 pandemic accelerated this transformation. Digital transactions surged to
unprecedented levels, highlighting both the increasing public reliance on digital finance
and the urgent need for a more agile and integrated financial ecosystem. Against this
backdrop, open banking emerges as a critical next step in modernizing the Philippine
financial sector.

Open banking refers to the practice of enabling third-party providers—typically FinTech
firms—to securely access consumers’ financial data from banks, with their consent,
through Application Programming Interfaces (APIs).' This framework empowers
consumers with greater control over their financial information. fosters transparency, and
stimulates competition and innovation within the sector.

This system can drive financial inclusion, particularly important in the Philippines where
a significant portion of the population remains unbanked or underbanked Through open
banking, more people could access tailored financial products, improving financial literacy
and economic participation.?

Open banking holds particular significance for the Philippines where, according to the
2021 Bangko Sentral ng Pilipinas (BSP) Financial Inclusion Survey, around 44% of
Filipino adults remain unbanked.° By lowering barriers to entry, open banking can enable
the development of personalized financial services, improve credit access, and boost
financial literacy—thereby accelerating financial inclusion

Globally, the implementation of open banking frameworks has yielded significant positive
outcomes. For instance:
+ Inthe United Kingdom, the Open Banking Implementation Entity (OBIE), established
under the Competition and Markets Authority, has led to over 7 million users
benefiting from new services and enhanced financial control 4

Team, €, (2023, February 1). What is Fintech as a service & the impact of apis on Fintechs?. Finextra Research
nttps://www.finextra.com/blogposting/23665 /what is-fintech-as-2-service-amp-the-impactof-apis-on

Team, T. |. (2024, May 10). Open banking: Definition, how it works, and risks. Investopecia.
https://www.investopedia.com/terms/o/open-banking. asp

2 Bangko Sentral ng Pilipinas. (2022). Financial Inclusion Survey. Retrieved from https://www.bsp.gov.ph

Open Banking implementation Entity (UK). (2023). Impact Report. Retrieved from https. //ww.openbar king.org.uk


+ Australia’s Consumer Data Right (CDR) extends beyond banking into sectors like
energy and telecommunications, creating a robust data-sharing ecosystem.®

+ In Asia, the Monetary Authority of Singapore (MAS) and the Hong Kong Monetary
Authority (HKMA) have launched open API frameworks promoting secure, innovative
financial solutions across the region.®

Locally, digital financial services like GCash, Maya, and Coins.ph exemplify how open
banking principles—if institutionalized—can optimize customer experience, reduce
transaction costs, and expand financial access.’ Yet, the current absence of a unified
legal and regulatory framework limits these innovations and leaves consumers
vulnerable

While the promise is immense, open banking also presents substantial challenges. Chief
among them are data privacy, cybersecurity, and the risk of regulatory arbitrage. Robust
authentication systems, clear liability frameworks, and inter-agency collaboration are
essential. Moreover, to ensure a level playing field, the proposed bill bars directors or
officers of traditional banks from working with FinTech firms engaged in open banking, in
order to prevent conflicts of interest and misuse of privileged financial data.

We provided a layer of security and safeguard to even the playing field by not allowing a
bank director or officer, connected to mainstream banking, to participate or work in an
‘open banking Fintech as it could put consumers as well as other players at risk. This is
because of the accessibility of confidential data and vital financial information in their
fingertips. This will surely give them undue advantage against their competitors.

The Bangko Sentral ng Pilipinas (BSP) is best positioned to lead the regulatory charge,
consistent with its mandates under Republic Act No. 11127 (National Payment Systems.
Act) and Republic Act No. 8791 (General Banking Law of 2000). The Department of
Information and Communications Technology (DICT), for its part, must ensure the
availability of secure digital infrastructure and adherence to data security standards under
the Data Privacy Act of 2012 (RA 10173).

In sum, this measure seeks to establish an Open Banking Framework in the Philippines,
institutionalizing the safe, inclusive, and efficient sharing of financial data. With the right
regulatory safeguards, inter-agency cooperation, and legislative support. open banking
can unlock broader access to financial services, foster healthy competition, and position
the Philippines at the forefront of financial innovation in the region.

Your favorable support to this bill is highly sought.

JURDIN, M. ROMUALDO.

5 Australian Government | Consumer Data Right. Homepage | Consumer Data Right. (n..). https://www.cdr.gov.au/

* Monetary Authority of Singapore & Hong Kong Monetary Authority. (2023). Open API Frameworks. Retrieved from
btps://wwww.mas.gov-sg and https://www hkma.gov.hk

7 Bratley, M. (2024, February 2). Open banking creates savings on payment processes and Business Operation Time VS non
users, new study reveals. IFA Magazine. https://ifamagazine.com/open-banking creates-savings-on-payment-processes-and-
business-operation-time-vs-non-users-new-study-reveals/


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

‘TWENTIETH CONGRESS
First Regular Session
HOUSE BILL NO. _754

INTRODUCED BY REPRESENTATIVE JURDIN JESUS M. ROMUALDO.

AN ACT
PROMOTING OPEN BANKING IN THE PHILIPPINES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

CHAPTER I: TITLE AND DECLARATION OF POLICY

Section |. Title. - This Act shall be known as the "Open Banking Act of 2024".

Sec. 2. Declaration of Policy. ~ It is hereby declared the policy of the State to promote
competition, innovation, and consumer welfare in the banking sector by facilitating the
secure and transparent sharing of financial data. This Act aims to empower consumers with
control over their financial information, foster the development of innovative financial

products and services, and enhance the efficiency and resilience of the financial system,

CHAPTER II: DEFINITIONS

Sec. 3. Definitions. — For the purposes of this Act, the following terms shall mean:
a. “Account-to-account Payments (A24)"” ~ Movement of money directly from one account
to another without the need for additional intermediaries or payment instruments, such as

cards.


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“Application Programming Interface (API) — Set of protocols and tools that allow
different financial software applications to communicate and share data efficiently. They
enable functionalities like secure payment processing, acvess to banking services, and
integration with investment and insurance platforms, facilitating seamless operations and

innovation in financial technology.

“Financial Companies (Fintech)” ~ Technology-driven companies providing financial

services.

“Financial Data" — Any information relating to a consumer's financial transactions,

accounts, or products held by a bank.

“Financial Institution” ~ refers to banks, non-bank financial institutions, and other
entities licensed or authorized by the Banko Sentral ng Pilipinas (BSP) to engage in
banking or financial activities.

“International Transactions” — Cross border financial transactions conducted through

open banking platforms,

“Open Banking” — The practice of securely sharing consumer financial data, including
account information and transaction history, among financial institutions and authorized
third-party providers through application programming interfaces (APIs) or other secure

channels upon consumer consent.

“Pull Payments” — A type of A2A payment wherein businesses withdraw, or ‘pull’,

money from consumers” accounts. This payment type is typically used by businesses
with recurring payment models, such as subscriptions, and it requires prior consent from

the customer.

‘A type of A2A payment that is normally used for transferring one-



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off sums as it requires consumers to manually send, or “push”, money to another account.

“Society for Worldwide Interbank Financial Telecommunications (SWIFT) — A secure
system that powers most international money and security transfers. It is a vast messaging
network used by financial institutions to quickly, accurately, and securely send and

receive information, such as money transfer instructions.

Third-party Financial Service Provider” ~ Any entity authorized by the Bangko Sentral
ng Pilipinas (BSP) or relevant regulatory authorities to access and utilize customer
financial data from financial institutions for the purpose of providing innovative financial

services to consumers.

CHAPTER III: PRINCIPLES AND STANDARDS
Sec. 4. Principles of Open Banking. - The following principles shall guide the

implementation of open banking in the Philippines:

(a)

(b)

Customer Consent: Banks must obtain explicit consent from consumers before
sharing their financial data with third-party financial service providers. Financial
institutions and third-party providers shall obtain explicit consent from consumers
before accessing or sharing their financial data, and shall provide clear and transparent

information about the purposes and scope of data sharing.

Data Security: It shall be the duty of the National Privacy Commission (NPC) to
ensure compliance of the financial institutions and third-party providers with the
provisions of the Data Privacy Act of 2012 (Republic Act No. 10173) and other
relevant laws and regulations governing the collection, use, and protection of personal
data within the open banking framework. In addition, The Department of Information
and Communications Technology (DICT) shall develop technical standards and
cybersecurity measures needed. Financial institution must promptly notify consumers

of any breach or security incidents


1 The BSP shall establish data security standards and requirements for financial

2 institutions and third-party providers engaged in open banking activities, including
3 encryption, authentication, and access controls.

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5 (c) Interoperability and Standardization: The BSP shall establish interoperability
6 standards and protocols to facilitate seamless data sharing and interoperability
7 among different open banking systems and platforms.

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9 Financial institutions and third-party providers shall be required to adhere to
10 BSP- approved standards and protocols to ensure compatibility and interoperability

ul of their systems and services.

13 The BSP may designate industry bodies or consortia to develop and maintain
4 interoperability standards and frameworks for the open banking ecosystem, subject
15 to BSP oversight and approval.

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7 (d) Competition and Innovation: Open banking shall promote competition and innovation
18 in the financial services industry by enabling the development of new products,
19 services, and business models.

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al The Philippine Competition Commission (PCC) shall monitor and promote fair
2 competition in the financial services sector, preventing anti-competitive practices.

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24 (e) Consumer Protection: Customers shall have the right 1o easily revoke consent for
25 data sharing, access transparent information about how their data is used, and seek
26 recourse in case there is a breach or misuse of their financial data at any time, subject
27 to applicable laws and regulations, including the Data Privacy Act of 2012 (Republic

28 Act No. 10173).


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The Securities and Exchange Commission (SEC) shall regulate fintech companies
and third-party providers involved in open banking to protect investors and ensure
market integrity. The DICT, in coordination with the Department of Trade and
Industry (DTI), SEC, and the NPC,

privacy are protected in open banking. Comprehensive guidelines on data

II ensure that consumer rights and data

security, privacy, and consumer consent shall be established.

(1) International Transactions: Open banking initiatives involving _ international
transactions shall comply with applicable international standards and regulations to
ensure security, privacy. and the prevention of money-laundering and financing of
terrorism acts. The BSP along with the Anti-Money Laundering Council (AMLC)
shall oversee these transactions to ensure compliance and to protect the integrity of

the Philippine financial system.

The BSP may collaborate with other government agencies, industry stakeholders, and
international organizations to develop and promote best practices for open banking and ensure
interoperability and compatibility among different open banking systems, This includes
promulgating rules and regulations including standards for API development, data security,

consent management, addressing vulnerabilities, and dispute resolution.

‘The BSP shall publish aggregate data on open banking activities, including the number of
authorized third-party providers, volume of data sharing transactions, and consumer complaints

or disputes, to promote transparency and accountability in the open banking ecosystem.

Sec. 5. Prohibition to Open Banking Participating Fintech. — To ensure fair and

transparent competition under the Open Banking System, no incumbent bank director or officer

connected to the mainstream banking sector will be allowed to participate in the open banking
system Fintech. Past officers of the banking industry for the last tive (5) years are also covered

by this prohibition.


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CHAPTER IV: REGULATORY OVERSIGHT

Sec. 6. Regulatory Authority. — The Bangko Sentral ny Pilipinas (BSP) shall have
primary responsibility for the oversight and regulation of open banking activities in the
Philippines, including the issuance of licenses, supervision of compliance, and enforcement of

penalties for violations of this Act and related regulations.

Financial institutions and third-party providers shail submit regular reports to the BSP detailing

their compliance with the provisions of this Act and related reguitions, including data security

Measures, consumer consent procedures, and incidents of unauthorized access or data breaches.

Sec. 7. Licensing and Authorization. — Third-party financial service providers must
obtain licenses or authorizations from the BSP to operate and access customer financial data and
comply with the registration and reportorial requirement of the Securities and Exchange

Commission (SEC) to protect the interest of the public and ensure market integrity.

Fintech must adhere to specified standards and requirements of the BSP and government

regulatory agencies to ensure the security and privacy of consumer financial data.

Sec. 8. Monitoring and Enforcement. ~ The BSP shall conduct regular monitoring and
enforcement activities to ensure compliance with data security, consent, and transparency
standards.

It shall have the power to investigate complaints, conduct audits, and take enforcement actions

against entities found to be in violation of this Act.

CHAPTER V: IMPLEMENTATION AND TRANSITION
Sec. 9. Timeline and Requirements. — Banks shall implement open banking standards
and protocols through secure APIs or other designated channels within a specified timeline

determined by the BSP, in consultation with industry stakeholders.



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Sec. 10, Education and Awareness. ~ The BSP shall develop and implement programs to
promote financial education and consumer awareness regarding open banking, including the

benefits, risks, and rights of consumers in sharing their financial data.

Financial institutions and third-party providers shall be required to provide clear and accessible
information to consumers about open banking services, including potential risks, privacy

implications, and dispute resolution mechanisms.

‘The BSP shall collaborate with relevant government agencies, educational institutions, and non-

governmental organizations to disseminate information and conduct outreach activities to raise

awareness about open banking and empower consumers to make informed decisions about their

financial data.

‘The BSP shall conduct periodic assessments of the effectiveness of financial education and
consumer awareness initiatives related to open banking and make recommendations for

improvement as necessary.

CHAPTER VI: VIOLATIONS, SANCTIONS, AND DISPUTE RESOLUTIONS

Sec. 11. Violations and Sanctions, — Financial institutions and third-party providers
found to have violated the provisions of this Act or related regulations shall be subject to a fine
not exceeding Two million pesos (P2,000,000.00) or imprisonment of not lower than six (6)
years and one (1) day and not higher than twelve (12) years, or both, at the discretion of the
court. The BSP may likewise suspend or revoke the licenses of these providers and subject the

offenders to administrative penalties.

If the violator is a government officer, personnel, or employee, they shall be liable for a fine not

exceeding One million pesos (P1,000,000.00) or imprisonment of not lower than six (6) years


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and one (1) day and not higher than twelve (12) years, or both, at the discretion of the court, In
addition, they will be removed from the office, subject to the rules and regulations of the

Civil Service Commission.

Individuals or entities found guilty of unauthorized access, use, or disclosure of consumer
financial data shall be liable for a fine not exceeding One million pesos (P1,000,000.00) or
imprisonment of not lower than six (6) years and one (1) day and not higher than twelve (12)

years, or both, at the discretion of the court.

‘The Anti-Money Laundering Council (AMLC) shall be working alongside BSP to enforce
stringent anti-money laundering regulations in order to ensure that the open banking mechanism

does not facilitate money laundering or terrorist financing.

Sec. 12. Dispute Resolution Mechanisms. - The BSP shall establish mechanisms for the

resolution of disputes arising from open banking transactions, including consumer complaints,

disputes between financial institutions and third-party providers. and breaches of contractual

obligations.

Financial institutions and third-party providers shall be required to implement internal dispute
resolution procedures and participate in alternative dispute resolution mechanisms accredited by

the BSP, such as mediation or arbitration, to resolve disputes in a timely and efficient manner.

‘The BSP may provide guidelines and assistance to facilitate the resolution of disputes and ensure

fair and equitable outcomes for all parties involved in open banking transactions.


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CHAPTER VII: COMPLIANCE REVIEW

Sec. 13. Performance Review. — The BSP shall conduct periodic performance reviews of

the effectiveness and impact of this Act, with necessary amendments or revisions made to

address emerging challenges or opportunities.

It shall submit regular reports of the outcome of its periodic review to the Joint Congressional

Oversight Committee.

Sec. 14. Joint Congressional Oversight Committee. - There is hereby created a Joint
Congressional Oversight Committee to monitor the implementation of this Act and to oversee
the functions and performance of the implementing agencies. The Committee shall be composed
of five (5) Senators and five (5) Representatives to be appointed by the Senate President and the
Speaker of the House of Representatives, respectively. The Oversight Committee shall be co-
chaired by the Chairpersons of the Committee on Banks, Financial Institutions and Currencies of
the Senate and Committee on Banks and Financial Intermediaries of the House of

Representatives.

CHAPTER VL

: FINAL PROVISIONS

Sec. 15. Appropriations, — The amount necessary for the eftective implementation of this
Act shall be charged against the annual budget of the Bangko Sentral ng Pilipinas under the

General Appropriations Act.

Provided, That, other lead government agencies responsible to monitor the compliance of this
law shall also include in their annual budgets the necessary funding requirements consistent with

their mandates as provided in this Act.


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Sec. 16. Implementing Rules and Regulations. — The BSP. in consultation with relevant
government agencies and industry stakeholders, shall formulate the rules and regulations

necessary to implement the provisions of this Act within ninety (90) days from its effectivity,

Sec. 17. Separability Clause. ~ If any provision of this Act is declared invalid or
unconstitutional, the remaining provisions not affected thereby shall remain in full force and

effect.

Sec. 18. Repealing Clause. ~ Any law, presidential decree, order, issuance, rule and
regulation, or parts thereof, which are inconsistent or contrary to the provisions of this Act are

hereby repealed or modified accordingly.

Sec. 19. Effectivity. ~ This Act shall take effect after fifteen (15) days following its

publication in the Official Gazette or in a newspaper of general circulation,

Approved.