Open finance holds the potential to revolutionize the financial industry in the Philippines by democratizing access to credit for the unserved and underserved segments.
This was the central message from UBX President and CEO John Januszczak during his talk at the Digital Banker’s Southeast Asia Tour.
“Credit is the killer app for open finance in the Philippines because this is the biggest problem that has to be solved,” Januszczak said.
He noted that traditional credit scores, derived from banking transactions, are insufficient to provide more Filipinos with access to credit.
Leveraging AI for Financial Inclusion
UBX is pioneering the use of artificial intelligence (AI) to process alternative data for credit assessments. By focusing on measuring character and credibility rather than traditional credit scores, UBX aims to unlock credit for many Filipinos.
“AI plays a crucial role in analyzing vast amounts of data and uncovering patterns related to trust and credibility, which are essential for making informed lending decisions,” Januszczak explained.
UBX’s open finance platform collects massive amounts of data and uses AI to assess the creditworthiness of its customers.
The approach has already seen success. For example, Seneca Trucking accessed working capital through UBX’s online lending marketplace despite lacking conventional banking credentials.
This access enabled the company to grow its business, benefiting its employees and the broader community.
Addressing the Credit Gap
Citing data from the Securities and Exchange Commission (SEC), Januszczak highlighted a staggering PHP 12 trillion business credit gap in the Philippines.
Globally, between 4.5 billion and 5 billion people have limited to no access to financial services, including credit.
To effectively address these gaps, Januszczak believes that the financial industry needs to adopt a new mindset. This involves embracing technological innovations such as AI and data analytics to more accurately assess creditworthiness, moving beyond traditional banking transactions. “Providing credit to people who really need it in the Philippines requires that we have that mindset shift,” he said.
The Promise of Open Finance
Since 2019, UBX has made significant strides in promoting financial inclusion in the Philippines.
Januszczak envisions a future where all 117 million Filipinos are connected to the global economy without any barriers to access.
“What will it be like when we connect all 117 million Filipinos to the global economy without any barriers to access?” he asked.
UBX’s efforts in open finance underscore the transformative potential of technology in creating a more inclusive financial system.
By leveraging AI to assess credibility and trust, UBX is paving the way for a future where access to credit is democratized, empowering individuals and businesses across the Philippines.
