economic activities outside the banking system, including information on enforcement of civil cases, announced tax arrears, social insurance fees payment, payment of public utility fees such as water, electricity, gas and phone calls, and administrative enforcement information such as environmental protection and quality inspection. at present, credit information collected from financial institutions have already been fully recorded in the database, and the pbc has reached a consensus with relevant departments to include on a pilot basis other information such as tax payment arrears, social security contribution payment and administrative enforcement information on environmental protection, quality inspection in the databases in the near future. fourth, the databases have strong social functions. recording the above mentioned information in the enterprise and individual credit report is conducive to fully reflecting the credit status of enterprises and individuals and helps commercial banks to prevent and manage credit risks. meanwhile, government departments could effectively spread administration enforcement information through the national information network of the database, which helps to strengthen government enforcement, improve the administrative management and enhance the credit awareness of enterprises and individuals in other fields. for instance, since the information of enterprises ’ irregularities on environmental protection is included in the databases, some banks have refused to issue loans to such enterprises, which is of great significance to prevent credit risks and improve china ’ s environmental protection. the databases are widely used after their establishment, and have provided nearly 200 thousand inquiry terminals to the outlets of banking institutions across the country, with daily inquiries averaging 260 thousand and the daily inquiries in april 2007 alone exceeding 340 thousand. inquiring the credit report of enterprises and individuals has become a formal procedure of examination before financial institutions grant loans. some banks have also included the database inquiry in the electronic procedure of lending to individuals and small enterprises, and quantitative models are employed to realize quantitative management and pricing of credit risks of individual and small enterprise customers. nevertheless, we should be clearly aware that the products and services provided by the individual and enterprise databases are not diversified, since at present the databases only provide credit report. therefore, how to better use the databases, develop diversified credit information products, improve credit risk management and credit business of commercial banks, and further expand credit market have become important challenges confronting the credit information sector and credit market. according to a research on world credit market by international finance corporation in 2004, every improvement in credit information system, such as updating from sharing only negative information to sharing both positive and negative information, could trigger loan extension of financial institutions by 6 percent of gdp ; while every increase of

benjamin e diokno : supervision in challenging times speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the sap financial services live, 16 november 2020. * * * thank you, peter for the introduction. good day to everyone. it is with great pride that i welcome you all to the central bank stream of sap financial services live 2020. i understand that while this global flagship event has been regularly held for more than a decade, this is the first time that it is having a central bank stream. with this, i am very pleased. financial supervision has always been a challenging undertaking. while it is continuously made more exciting by the rapid pace of digital transformation all over the world, it is also made much more complicated by the covid - 19 pandemic. that said, digital transformation has affected the philippine financial system and is profoundly changing bank supervision. just like in other countries in asia and around the world, the digital transformation of the philippine financial system has started long before this pandemic. as we speak, asia ’ s high - income economies, for example, continue to leverage long - standing strengths in information and communications technology policy vision and implementation in accelerating fiber deployment, cementing plans for 5g rollout and advancing ai development. based on the 2018 asian digital transformation index, asian countries continue building supportive environments for technology - led change, such as the availability of open data and investment in infrastructure. the covid - 19 pandemic, however, has served as an unexpected catalyst for digital transformation ’ s rapid acceleration by encouraging the use of digital financial services such as cashless payments and electronic fund transfers. when the bangko sentral ng pilipinas ( bsp ) conducted a baseline survey of the impact of covid - 19 pandemic on philippine banks, we found out that while the big banks are generally on pace with their digitization initiatives, smaller banks are yet to catch up. the discrepancy is because of the lack of right technology, insufficient in - house skills, lack of budget, and over - reliance on legacy technology. however, despite these challenges, the pandemic has forced all financial institutions in the philippines to fast track their digitization initiatives to cope with movement restrictions and social distancing measures. banks which fail to keep up with this digital transformation face the risk of losing a significant part of their client base and market share.