The Securities and Exchange Commission (SEC) said it is mandated to protect the investing public from possible risks brought about by innovations, such as financial technology (fintech).
At the same time, SEC Commissioner Kelvin Lester K. Lee said the agency understands that fintech and innovation play an important role in the country’s economy as the pandemic highlighted the importance of financial services.
“We have witnessed the greater importance of fintech in its role in allowing access to financial services despite restrictions on our movements,” he told regulators during the webinar on “Fintech Beyond Covid-19: What Next?” during the 15th Regional Leadership Program for Securities Regulators.
As supervising commissioner of the SEC’s Philifintech Innovation Office, Lee said the Philippines is primed for fintech innovation.
Based on the 2021 Technology and Innovation Report of the United Nations Conference on Trade and Development, it ranked the Philippines 44th out of 158 counties for readiness for frontier technologies and second for information and communications technology deployment, skills, research and development, industry activity and access to finance.
“So, fintech clearly is important for the Philippines. But of course, to effectively implement and roll out fintech innovations in a particular jurisdiction, we need to discuss the role of the regulators,” Lee said.
“It’s a delicate balancing act. On the one hand, as regulators we don’t want to stifle innovation; in fact, we want to encourage growth. But on the other hand, we need to be aware of the risks, some of which are very uncertain at this point, that may arise by allowing new innovations to operate.”
Lee said regulating the fintech sector is challenging as it entails foreseeing the risks and making room for them to encourage innovation.
“And it’s with all that in mind that we at the SEC, when we have to approach fintech and other digital innovations, we have to approach it very carefully,” he said.
In regulating fintech in the Philippines, the SEC will adhere to the principle that “no one size fits all;” adopt an activity-based rather than an entity-based approach; implement principles-based regulations rather than specific rules; and remain technology neutral, he said.
“Our aim is that through our innovation office, we can regularly touch base with our stakeholders, and we get to learn from each other.”