The Philippines has a significant opportunity to revolutionize financial inclusion through open finance, according to John Januszczak, President and CEO of UBX, the Philippines’ digital transformation leader.
Speaking at the Digital Banker’s South East Asia Tour, Januszczak emphasized open finance’s potential to unlock credit for Filipinos currently unserved or underserved by traditional banking systems.
“Credit is the killer app for open finance in the Philippines because this is the biggest problem that has to be solved. We are creating an open finance platform where we collect massive amounts of data and we use artificial intelligence to uncover credibility and to digitally attempt to measure trust and credibility,” he said. Januszczak argues that credit scores, which rely heavily on banking history, aren’t enough to provide wider access to credit.
Januszczak proposes leveraging artificial intelligence (AI) to analyze alternative data sources for credit assessments. This data could include factors beyond traditional banking transactions, focusing on a borrower’s credibility and character.
This approach prioritizes the borrower’s trustworthiness over traditional credit scores. AI plays a crucial role in processing vast amounts of data and identifying patterns that indicate trustworthiness, ultimately leading to more informed lending decisions.
UBX paves the Way with Real-World Examples
UBX is already using AI for creditworthiness assessments on its platform. This allows lenders to extend business loans to organizations without traditional credit scores.
For example, UBX’s online lending marketplace facilitated access to working capital for Seneca Trucking, a company lacking conventional banking credentials. This empowered Seneca Trucking to grow its business, benefiting not just the company but also its employees and the wider community.
Citing data from the Securities and Exchange Commission (SEC), Januszczak highlights the staggering PHP12 trillion business credit gap in the Philippines. Globally, billions of people have limited or no access to financial services.
Januszczak believes that to bridge these gaps, the financial industry needs a fundamental shift in mindset. This new approach prioritizes financial inclusion and embraces technological innovations like AI and data analytics for a more accurate assessment of creditworthiness, moving beyond traditional reliance on banking history.
A Mindset Shift for Financial Inclusion
“Providing credit to people who really need it in the Philippines requires that we have that mindset shift,” Januszczak emphasized.
He believes that by embracing open finance, the Philippines can unlock significant benefits. Januszczak concluded by posing a thought-provoking question: “What will it be like when we connect all 117 million Filipinos to the global economy without any barriers to access?”
UBX’s work since 2019 serves as a testament to the transformative potential of open finance in achieving financial inclusion for all Filipinos.