THE Philippines is expanding its financial inclusion programme for its two million overseas Filipino workers (OFWs) by leapfrogging into the digital economy with the forthcoming launch of the first digital bank for OFWs.
The rollout of the country’s first ever digital-only, branchless bank, also known as the Overseas Filipino (OF) Bank is set for the end of June, according to Landbank president and CEO Cecilia Borromeo.
The OF Bank will primarily benefit the country’s migrant workers and will utilize digital technology and smartphone apps to provide banking and other financial services.
The government is also set to launch other digital initiatives aimed at improving tax compliance. These initiatives are the Electronic Receipt and Invoicing, and Electronic Sales Reporting System or E-Invoicing System to provide better and faster services to taxpayers.
“The biggest (digitalization) programme we're working on now is e-invoicing. Once we get that e-invoicing programme set up, that will mean a big step in e-governance already,” says finance secretary Carlos Dominguez during a recent online hearing of the economic stimulus cluster of the Defeat Covid-19 Committee of the Philippine House of Representatives.
“We have been working on that for the last year or so, and we should come to a conclusion, a good programme by the middle of, or maybe the 3rd quarter of this year,” he says, responding to a recommendation by lawmakers for the Philippine government to strengthen and expand its digital-based programmes for frontline services.
Last January 30, the Bangko Sentral ng Pilipinas (Philippine Central Bank) granted a “No Objection” clearance to the OF Bank on its use and implementation of a digital onboarding system with artificial intelligence facilitating an electronic know-your-customer process, clearing the way for remote opening of accounts with the OF Bank.
A joint initiative of the Department of Finance and Landbank, the OF Bank is the fulfillment of a 2016 presidential campaign promise of then-Davao City mayor Rodrigo Duterte to put up a bank for overseas Filipino workers when he becomes President.
In September 2017, President Duterte signed Executive Order No. 44 authorizing Landbank to acquire the Philippine Postal Savings Bank (Postbank) so it could be converted into the OF Bank, which is classified as a savings bank of Landbank.
Overseas Filipinos with Postbank accounts who migrated to the OF Bank were issued EMV-enabled VISA debit cards they could use for automatic teller machine withdrawals, fund transfers, bills payments and online purchases, among others.
Dominguez has envisioned the OF Bank to be a digital-only facility to make it easy for overseas Filipinos to access a wide array of financial and investment products.
The OF Bank will enable overseas Filipinos to invest in their own country which they have helped transform into one of the fastest-growing economies in the region, Dominguez says, adding that the OF Bank could be the ideal vehicle for the Philippines to “leapfrog” to the digital economy.
The e-invoicing programme, meanwhile, is part of the efforts of the Bureau of Internal Revenue to digitalize its tax administration and collection system.
The Republic of Korea has extended a grant through the Korea International Cooperation Agency to fund the pilot stage of the bureau’s e-invoicing system.
According to Dominguez, the e-invoicing system will complement the Duterte administration’s Comprehensive Tax Reform Programme to make the tax system simpler, fairer and more efficient.
The e-invoicing system, which is envisioned to be launched later this year, will also translate into more convenient, reliable and transparent services for taxpayers, and set the stage for world-class tax administration in the country, the finance secretary adds.