Even our legal framework is trying to keep up with the disruption brought about by technology.
Due to the exponential growth of electronic financial transactions, there is a proposal in Congress to have a law that will regulate the use of bank accounts, electronic wallets, and other financial accounts in online transactions in a bid to curb the proliferation of cybercrimes.
There is no way to stop the growth of digital transactions in the country, especially with no less than the Bangko Sentral ng Pilipinas pushing for it, albeit the need to put additional safeguards to thwart financial transaction-related cyberattacks.
According to the BSP, as of the first quarter of 2021, 53 percent of adult Filipinos had e-money accounts, higher than the 29 percent in 2019.
The BSP also continues to introduce innovations on electronic payment systems in the country, particularly for PESONet and InstaPay, the two electronic fund transfer facilities under the central bank’s National Retail Payment System.
Digital payments accounted for 20.1 percent of total financial transactions in the country in 2020, up from 14 percent in 2019 and one percent in 2013.
The BSP has noted though that while financial technologies have revolutionized the way customers transact their financial needs, the threats posed by notorious cyberactors have magnified as well. The increased interconnectivity and accessibility of systems, customers, and institutions inevitably lure more malicious actors as potential attack surfaces continue to widen, it said.
To further support the expansion of the digital finance ecosystem, the BSP has also created a new category of banks – that of digital banks and is now requiring the registration of virtual asset service providers.
The business of banking is imbued with public interest, and banks are required to exercise the highest degree of diligence in handling deposits from the public. Deposits in bank are governed by the rules on simple loan, which means that when we deposit our money in banks, we the depositors are the creditors and the banks are the debtors or borrowers.
Banks cannot, therefore, just waive their liability for any loss or damage for the use of their online banking services due to hacking or other security breaches. This will only erode the confidence of the public in the banking system and defeat the BSP’s bid to have more people opening bank accounts and entrusting their hard-earned money with the system. Banking is fiduciary in nature or one that is based in trust, and people have to be able to trust the system.
Bank at your own risk is not something depositors will be able to accept as a new normal. With deposits in banks earning very little in terms of interest earnings, depositors need a little more confidence boost.
While the proposed bill in Congress penalizes money mules and phishing that would lead to illegal online financial activities, we would like to hear about banks taking more responsibility for loss of their depositors’ funds, especially when transacting online. While it is true that depositors also have a responsibility in making sure that they bank safely, especially when done through digital means, it is a shared responsibility and not one that can be placed entirely on the depositor.
When banking was more simple and traditional, banks are responsible if funds are disbursed to persons other than the depositor or his/her duly authorized representative (i.e. passbook holders), and to persons other than the payee in the case of checks. With the advent of automated teller machines (ATMs) and mobile banking, it is true that the ecosystem has changed. But the duty of exercising the highest degree of diligence in handling deposits did not and remains to this day, nothwithstanding the change in the way banking transactions are conducted.
The future is in technology
In a recent study, market intelligence firm International Data Corp. (IDC) said that as ASEAN nations continue to grapple with the impact brought by the pandemic, including the impact on the economy and the way organizations have to react quickly to changes, digital transformation acceleration continues to be at the forefront for a large number of ASEAN organizations.
It noted that ASEAN organizations are increasingly not only looking to innovate and generate revenue from digital products and services, but to also be part of the ever-growing and evolving industry ecosystems.
IDC has come out with its top 10 ICT and business predictions that will shape how ASEAN organizations and industries operate in a digital-first world.
• By 2023, one in three companies will generate more than 15 percent of their revenues from digital products and services as compared to one in six in 2020.
• By 2025, 55 percent of successful digitally innovative products will be built by teams that include people with creative, critical thinking, analysis, and automation skills, as well as software engineers.
• By 2023, 35 percent of organizations will allocate half of their security budget to cross-technology ecosystems/platforms designed for rapid consumption and unified security capabilities to drive agile innovation.
• By 2026, on average 30 percent of ASEAN top 500 company revenue is derived from industry ecosystem shared data, applications, and operations initiatives with partners, industry entities, and business networks.
• From 2021 to 2027, the number of new physical assets and processes that are modeled as digital twins will increase from two percent to 24 percent, resulting in operational performance optimization.
• 25 percent of large enterprises will see 20 percent improvement in information usage by 2026 due to investments in intelligent knowledge networks that turn structured/unstructured data into findable and actionable knowledge.
• An evidence-based culture is paramount for digital-first enterprises. By 2026, 20 percent of organizations will use forms of behavioral economics and AI/ML-driven insights to nudge employees’ actions leading to a 60 percent increase in desired outcomes.
• Digital infrastructure is at the core of future enterprises. By 2025, a six times explosion in high dependency workloads leads to 65 percent of ASEAN top 500 companies using consistent architectural governance frameworks to ensure compliance reporting and audit of their infrastructure.
• By 2022, more than 50 percent of organizations will prioritize connectivity resiliency to ensure business continuity, resulting in uninterrupted digital engagement to customer, employees and partners.
• By 2024, digital-first enterprises enable empathetic customer experiences and resilient operating models by shifting 50 percent of all tech and services spending to as-a-service and outcomes-centric models.
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