The coronavirus pandemic made financial technology, or fintech in cyberspace parlance, a way of life.
But strict regulations and the jittery market made fintech investments erratic.
In Hong Kong, China’s polarizing national security law forced technology firms to reconsider their presence in Hong Kong while some moved data and people out.
Companies that handle data deemed to endanger national security are punishable under the law which took effect in July.
Reports have it that Alibaba-backed Ant Group, China’s second-largest brokerage Haitong Securities, Huawei’s cloud division and Tencent-backed digital bank WeBank have approached Singapore industry groups.
But what if the Philippines make fintech regulations more attractive by addressing investors’ concerns?
House Bill (HB) 7760, or the Financial Technology Industry Development Act, will mandate the creation of a Financial Technology Office (FTO) within the Bangko Sentral ng Pilipinas (BSP) to draw up a financial technology industry roadmap.
HB 7760 also seeks to extend the eligibility for a Special Investors Resident Visa of investors and management staff, regardless of investment size, provided they are recommended by the BSP governor.
“We are in the game for fintech investments. We have 74 million smartphone users who spend about 10 hours a day on the internet. That is one of the biggest consumer markets for digital products in the world. For market-seeking firms, we are probably one of the most attractive,” Albay (2nd District) Representative and bill author Joey Salceda said.
Fintech firms use technology and innovation to compete with or complement traditional financial methods in the delivery of financial services. Among these are virtual banks, online lending facilities and crypto currencies.
“Fintech is the future of money. The Philippines can be a leader in this area. If we are going to dream the future up, let’s dream big,” he added. “The digital economy, while emerging, seemed to be still distant before the COVID-19 struck. Now, the digital economy is upon us.”
HB 7760 also includes the financial technology industry in the Investment Priorities Plan for 10 years, qualifying it for tax incentives on offer by the Board of Investments.
The bill recommends an annual review of policies and infrastructure for data security and management, to ensure that the country’s infrastructure and policies are compatible with basic standards for the development of a sophisticated financial technology sector.
The proposed FTO will recommend regulatory sandboxing, the practice of allowing fintech firms to pilot their innovations within a small but largely deregulated market. This will allow firms to fix glitches in their system with little risk, before they launch their services in the larger market.