A Briefer on the Current Regulations on Electronic Banking and Electronic Operations
In 2019, the Bangko Sentral ng Pilipinas (BSP) issued Circular No. 1033, providing amendments to the regulations on electronic banking services and other electronic operations. These amendments mainly cover the developments in electronic payment and financial services (EPFS). With the changes brought about by the pandemic, more banks and businesses recognize the importance of e-banking and other fintech solutions in improving the delivery of their services and commodities.
The current rules governing e-banking and operations show how the BSP seeks to facilitate smooth transactions among e-banking providers and users. The BSP aims to promote a safe, efficient, reliable. affordable, and inclusive national payment system in order to support the delivery of these services. Citing the latest Banking Sector Outlook Survey, the BSP suggests that the use of technology will define the future landscape of the local banking sector, with a number of banks already capitalizing on electronic solutions or fintech in order to reach a wider scale. In recognizing the importance of fintech in digital transformation, the BSP has also launched the FinTech Alliance.ph.
Electronic Payment and Financial Services
The circular defines electronic payment and financial services (EPFS) as those products or services offered by BSP-supervised Financial Institutions (BSFls) to enable customers to receive payments or initiate financial transaction and other related services through an electronic device such as a computer, mobile phone, Automated Tellering Machine (ATM), and other devices. EPFS allows customers to electronically access information on their transaction accounts, move or receive funds from one account to another, or to avail of credit, investment, trust, or other banking products and/or services such as online or mobile loan application, electronic placement of funds in certain investment accounts, etc. Meanwhile, a transaction account is an account such as a deposit account, e-money, electronic wallet, etc. held or maintained with a BSFI which could be a bank or a non-bank.
EPFS can be classified as either a basic EPFS or an advanced EPFS. Basic EPFS are limited to services allowing only receipt of funds or access to information. Examples of which include account balance and a statement of account. Advanced EPFS are those, in addition to basic services, enable customers to send funds and initiate other financial transactions.
The circular mandates a BFSI to comply with relevant regulations such as to oversee its EPFS through an appropriate top-level committee to ensure that concerns on these services are timely and properly addressed; make its EPFS with funds transfer functionality interoperable by participating in an Authomated Clearing House pursuant to the guidelines provided under the Manual of Regulations on Banks (MORB) or the Manual of Regulations on Non-Bank Financial Institutions (MORNBFI) on Payment Systems; integrate EPFS in its overall strategic plan to ensure that these services do notput undue strain on its systems, financial performance, and risk managment capability; promote EPFS by implementing appropriate marketing strategies; ensure that it satisfied the legal and regulatory requirements for Anti-Money Laundering/Combating Financing of Terrorism; and comply with the revelant regulations on payments, Information Technology (IT) Risk Management Standards, Guidelines on Electronic Products and Services, Business Continuity Management regulations, and Consumer Protection Standards of Conduct for BSFIs.
Reportorial Requirements for BSFIs
It also provides the reportorial requirements of BSFIs which they shall provide with the BSP. The required reports which shall be submitted to the appropriate supervising department of the Bangko Sentral in the manner prescribed include the (1) EPFS Transactions and Indicators, and the (2) changes and enhancements in EPFS). Failure to comply with these reportorial requirements shall subject the BSFI to applicable sanctions.
Interoperability of BSP-Supervised Financial Institutions
Moreover, BSFIs which are licensed to offer funds transfer services shall make these services interoperable by participating in Automated Clearing Houses (ACHs). A BSFI must (a) secure a Confirmation of Eligibility (COE by submitting to the BSP the appropriate supervising department of the BSP a letter of intent to participant in an identified ACH, (b) submit minimum documentary requirements to the PSMB duly recognized by the BSP such as a valid COE, Corporate Secretary’s Certificate or equivalent document in case of foreign bank branches on the approval of the board of directors of the participation of the BSFI in the ACH, and a copy of the agreement with the bank sponsoring the BSFI into settlement, if applicable, and (c) comply with any other requirements set by the PSMB or provided in the ACH.
Finally, the circular also includes the Guidelines on Licensing of EPFS which states that a BSFI intending to provide EPFS shall comply with the enumerated requirements under the said guidelines in conjunction with the Guidelines on the Granting of License/Authority provided in the MORB and MORNBFI.
 Lee C. Chipongian, Banks Seen to Increase Use of Fintech – BSP Survey, https://www.fintechalliance.ph/news-events/banks-seen-to-increase-use-of-fintech-bsp-survey. June 13, 2019
 BSP Circular No. 1033, s. 2019, Subsec. X701.1/4701Q.1
 BSP Circular No. 1033, s. 2019, Subsec. X701.2/4701Q.2 (a)
 BSP Circular No. 1033, s. 2019, Subsec. X701.2/4701Q.2 (b)
 BSP Circular No. 1033, s. 2019, Subsec. X701.6/4701Q.6