Your data, your rights: Building full picture credit in the Philippines

For years, reformers have spoken of “Open Banking” and “Open Finance.” These are important ideas, but they sound technical and distant. What the Philippines truly needs is something clearer and more ambitious: What we call Full Picture Credit.

We need a system where a person’s creditworthiness is assessed not only through the existence of a bank account, credit card, or loan, but across the full range of their financial life. Responsibility and capacity to pay show up in many places: utility bills paid on time, prepaid mobile top-ups, subscription payments, remittance inflows, e-wallet transactions, gig platform earnings, loyalty programs, even rent payments. These everyday behaviors reflect financial discipline. They should count.

Imagine applying for a loan and being able, with your consent, to authorize the lender to access relevant financial data beyond traditional bank records, such as utility payments, mobile subscriptions, remittance history, e-wallet transactions, etc. Through secure application programming interfaces (APIs), the same technology that powers mobile apps, this data could be transmitted directly to financial institutions for credit evaluation.

With more complete information, lenders gain a fuller and more accurate view of an applicant’s financial behavior. For responsible borrowers, sharing more data could mean better outcomes: higher approval rates, larger loan amounts, and lower interest rates. Applying with limited information, by contrast, often leads to conservative credit decisions.

Without meaningful data sharing, lenders assess risk based on partial visibility. When individual risk cannot be measured accurately, pricing reflects the average risk of a broader pool. As a result, responsible payers effectively subsidize those whose risk profiles are unclear. Lenders price defensively. More granular data allows risk to be differentiated more precisely, so disciplined borrowers are not penalized by a system that cannot fully see them.

The Philippines has already laid much of the groundwork. In 2021, the Bangko Sentral ng Pilipinas (BSP) issued Circular No. 1122 adopting an Open Finance Framework built on consent-based data portability and inter-operability. In 2023, the BSP launched the Open Finance PH Pilot to explore API-enabled services and governance standards. The Securities and Exchange Commission (SEC) introduced regulatory sandbox mechanisms to encourage financial innovation. The Credit Information Corp. continues expanding access to credit data and strengthening reporting obligations.

These are critical building blocks. But they remain largely within traditional financial silos. Full Picture Credit means going further by recognizing alternative data that are evidence of responsible transacting and creditworthiness. In a modern digital economy, responsible non-bank behavior should matter.

The urgency is clear. According to the BSP’s 2024 Financial Inclusion Annual Report, 56% of Filipino adults now have an account, up from 29% in 2019. That is significant progress — but it still means roughly 44% remain unbanked. Of those with accounts, many rely on e-money rather than traditional banks, and most accounts are used primarily for payments rather than savings.

Globally, 76% of adults had an account in 2021, according to the World Bank’s Global Findex. The Philippines is catching up, but access to an account does not automatically translate into access to credit. Many Filipinos, especially informal workers and MSMEs, have steady incomes yet lack traditional credit histories. They are “thin file” borrowers: economically active but practically invisible to formal credit systems.

This is where alternative data becomes transformative and thankfully, international experience offers guidance.

In the United Kingdom, Open Banking allows consumers to authorize access to transaction histories for credit assessment. Lenders increasingly use cashflow-based underwriting to evaluate affordability in real time, particularly for thin-file borrowers. Open Banking has facilitated new market entrants and strengthened competition. Evidence shows meaningful entry effects and lower financing costs for certain borrowers, especially SMEs that benefit from improved data access.

Brazil has scaled this approach even further. Its Central Bank built a national Open Finance infrastructure designed to increase competition and improve credit allocation. Millions of consumers have provided consent for data sharing, enabling standardized exchange of account, credit, insurance, and investment data. The Central Bank reported average reductions in interest rates for borrowers whose scores improved with expanded data. Better information translated into better pricing.

Cambodia offers a different lesson. Through the National Bank of Cambodia’s Bakong digital payment system, millions of inter-operable digital transactions now occur daily. While alternative data is not yet fully integrated into credit scoring, the digitization of everyday payments creates the transaction records necessary for new credit models to emerge. Once payments become visible, they can become meaningful.

The connection between better credit data and financial literacy is crucial. When consumers can see that paying a utility bill on time strengthens their credit profile, financial literacy becomes tangible. Responsible behavior generates measurable benefits. This feedback loop reinforces budgeting, timely payment, and prudent subscription management.

Financial literacy is not just about knowledge. It is about visible consequences. If the system ignores responsible non-bank behavior, it discourages engagement. If it recognizes that behavior, it rewards discipline.

The Philippines is uniquely positioned for this reform. We are a mobile-first society. Mobile connections exceed the national population. Filipinos spend among the longest hours online globally, and most access the internet through mobile devices. E-wallet penetration is high. Remittances are increasingly digital. MSMEs transact through QR payments and online platforms. Every day, Filipinos generate rich digital financial footprints, yet most of this data remains unused in formal credit assessment.

Full Picture Credit would allow Filipinos, with explicit consent and strong safeguards, to share their broader financial footprint across regulated institutions. It would enable lenders to price risk more accurately, reduce overreliance on collateral, and compete for underserved borrowers. Most importantly, it would create a system where financial responsibility translates directly into financial mobility.

This reform aligns with the Philippines’ Data Privacy Act, modeled heavily on the EU’s General Data Protection Regulation. The law enshrines the rights of data subjects: the right to be informed, to access, to object, and, critically, the right to data portability. Full Picture Credit does not weaken these protections, rather it activates them. It gives Filipinos the practical ability to direct where their data goes and for what purpose.

This is not about forcing data to move. It is about empowering individuals to decide when and how their data works for them.

The Philippines has already built the regulatory scaffolding. The next step is to expand the spectrum of usable data in a safe, responsible, and inclusive manner.

If we want genuine financial inclusion, we must reform credit assessment to reflect how Filipinos actually live and transact. It is time to move beyond narrow banking reform and enable our citizens to exercise their data, their rights, for their credit.

Source: Business World

R&I upgrades PHL credit rating to ‘A-’

Japan-based Rating and Investment Information, Inc. (R&I) upgraded the Philippines’ investment grade rating to “A-” amid the country’s strong economic performance.

“Based on macroeconomic stability and high economic growth path as well as expected continuous improvement in fiscal balance, R&I has upgraded the Foreign Currency Issuer Rating to ‘A-,’” it said in a document posted on its website.

This was one notch up from the country’s previous rating of “BBB+” assigned in August a year ago.

The credit rater also assigned a “stable” outlook for the Philippines from “positive” previously. According to R&I, a positive or negative outlook is not a statement indicating a future change of a rating. If neither a positive nor negative outlook is appropriate, it assigns a stable outlook.

“The Philippine economy will likely see stable growth and continuous improvement in the level of national income against the backdrop of active public and private sector investments, development of domestic business sectors such as business process outsourcing, and favorable demographics, among other elements,” R&I said.

The Philippine economy expanded by 6.3% in the second quarter, the fastest in five quarters or since 6.4% in the first quarter of 2023.

“The Philippine economy has been showing fast growth among the major economies in Southeast Asia,” it added.

At 6.3%, the Philippines’ second-quarter gross domestic product (GDP) growth was the second fastest in Southeast Asia, only behind Vietnam (6.9%) and ahead of Malaysia (5.8%) and Indonesia (5%).

The government is targeting 6-7% growth this year and 6.5-7.5% for 2025.

R&I also noted the country’s improved fiscal management as debt remains “affordable, given the manageable burden of interest payment.”

“The fiscal balance as a share of GDP, which had deteriorated during the COVID-19 (coronavirus disease 2019) pandemic, has improved and the government debt ratio will likely start falling in a year or two,” it added.

As of the second quarter, the government’s deficit-to-GDP ratio stood at 5.3%, still below the 5.6% deficit ceiling set for this year.

Meanwhile, the debt-to-GDP ratio eased to 60.9% in the second quarter from 61% a year earlier. It is expected to ease further to 60.6% by end-2024.

R&I also said that the Philippines’ current account deficit is also “not necessarily a negative element” in its assessment.

“The foreign exchange reserves stand at a sufficient level in comparison with that of imports. Despite the liabilities in excess of financial assets of international investment position, the gap between liabilities and assets remains at a low level relative to GDP. R&I, thus, believes that the external risk is limited.”

The central bank projects a $4.7-billion current account deficit for 2024, equivalent to 1% of GDP. The current account deficit stood at $1.7 billion in the first quarter, equivalent to 1.6% of GDP.

Meanwhile, Finance Secretary Ralph G. Recto said in a statement that this was the Marcos administration’s first credit rating upgrade.

“Our refined Medium-Term Fiscal Program is our blueprint for our ‘road to A rating,’” he said.

“This ensures that we can reduce our deficit and debt gradually in a realistic manner, while creating more jobs, increasing our people’s incomes, growing the economy further, and decreasing poverty in the process. Sticking to this program can help us get there faster.”

The Department of Finance said that improved credit rating from R&I will help attract foreign investors and access more affordable borrowing terms.

“This allows the government to channel funds that would have otherwise been allotted for interest payments towards more development programs such as more infrastructure projects, improved social services, better healthcare system, and quality education.”

The Bangko Sentral ng Pilipinas (BSP) said that the credit upgrade means lower credit risk which “allows a country to access funding from development partners and international debt capital markets at lower cost.”

“The BSP is committed to delivering on its mandate of promoting price stability, financial stability, and a safe and efficient payments and settlements system as this broadly supports sustained and inclusive economic growth,’’ BSP Governor Eli M. Remolona, Jr. said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the latest credit upgrade puts the Philippines three notches above the minimum investment grade rating.

“This is already similar and somewhat moved in line with the ‘A-’ credit rating given by another Japanese credit rating agency, JCR,” he added.

The Philippines currently holds a “A-” rating from the Japan Credit Rating Agency (JCR), “BBB” from Fitch Ratings, “Baa2” from Moody’s Ratings, and “BBB+” from S&P Global Ratings.

The government is targeting to achieve an “A” level rating before the end of the administration.

Source: Business World

Fitch affirms Philippines investment grade

 Fitch Ratings has affirmed the Philippines’ investment grade rating at BBB, a notch above the minimum grade, and maintained its stable outlook, citing the economy’s strong medium-term growth prospects.

In a rating action commentary dated June 7, the debt watcher said the Philippines’ gross domestic product (GDP) may expand by 5.8 percent this year from 5.5 percent in 2023 and 7.6 percent in 2022.

“We forecast real GDP growth of above six percent over the medium-term, considerably stronger than the BBB median of three percent, supported by large investments in infrastructure and reforms to foster trade and investment, including public-private partnerships (PPPs),” it said.

Fitch also sees a gradual reduction in government debt-to-GDP ratio at 54 percent by 2025 from 60.2 percent in the first quarter, which further supports the country’s long-term foreign currency issuer default rating of BBB.

However, the rating is “constrained by low GDP per head, despite an upward trend,” Fitch said.

“Droughts associated with the El Niño phenomenon are affecting agricultural production and electricity and water supply across parts of the country, while heavy rainfall expected during La Niña later this year poses risks to economic activity,” it said.

The Philippine economy expanded by 5.7 in the first quarter, slower than the 6.4 percent recorded in the same period a year ago, but higher than the 5.5 percent recorded in the fourth quarter of 2023.

The latest GDP print fell short of the government’s six to seven percent target.

Meanwhile, Fitch forecasts Philippine inflation to fall by 3.8 percent this year from six percent in 2023, before slowing further to 3.4 percent in 2025.

This is due to “lower commodity prices, base effects and the gradual pass-through of the 450-basis-point rate hikes since May 2022,” it said.

Headline inflation picked up to 3.9 percent in May from 3.8 percent in April. Year to date, inflation averaged 3.5 percent. This is still below the full-year 3.8-percent risk adjusted forecast of the Bangko Sentral ng Pilipinas (BSP).

In a statement, BSP Governor Eli Remolona, Jr. welcomed Fitch’s recognition of the central bank’s efforts to keep inflation within target and highlighted the BSP’s data-driven approach to setting monetary policy.

The debt watcher also expects the current account deficit to narrow to two percent of GDP at below $10 billion by 2025 from 2.6 percent last year, amid lower hydrocarbon import bill and higher services exports.

“Structural current account deficits are likely to persist in the medium-term, on strong domestic demand and the infrastructure build-out. We view the current account surpluses before 2019 as largely reflecting under-investment,” Fitch added.

“An investment-grade rating signals reduced credit risk, allowing countries to access funding at lower costs,” the BSP said.

A BBB rating indicates a low expectation of default risk, with the country’s capacity to meet financial commitments deemed adequate.

Meanwhile, a “stable” outlook suggests a low likelihood of a rating change over the next one to two years.

Source: Inquirer