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Welcome Message

Date: 02.15.2019

Place: BSP Assembly Hall

Occasion: IT Summit: Evolving Digital Transformation and its Challenges

Speaker: BSP Governor Nestor A. Espenilla, Jr., delivered by Deputy Governor Maria Almasara Cyd N. Tuano-Amad

Good morning.  Let me say at the outset that it is an honor to be reading the Governor’s message at this IT summit.

Fellow BSPers, good morning.  Welcome to the 2019 IT Summit.  A warm welcome to Dr. Tito Ortiz and his team and to our other guests.

As you know, digital transformation is one of my staunchest concerns, and of my passions as we straddle the worlds of today and tomorrow.  Even as Deputy Governor of the then Supervision and Examination Sector, I have actively pushed for the digital transformation at the BSP.  

This thrust first came into fruition when we commissioned a global consulting firm to develop a comprehensive IT Modernization study, or ITMS for the BSP.  The study was completed in January 2017, six months before I became BSP Governor.

The ITMS laid out a 4-year IT Strategy and Roadmap.  It contained recommendations in fourteen (14) IT Domains.  These included: IT Governance, Organization Design, Project Management, and Enterprise Architecture.  Its ongoing implementation is expected to lead to a massive transformation of our IT systems and organization.  The ultimate goal is to have an agile and resilient platform to enable the BSP to more effectively deliver on its mandates of safeguarding price stability, promoting financial stability, and ensuring a safe, reliable and efficient payments system.

In 2017, the Digital Payments Transformation Steering Committee, or DPTSC, was also created.  This Committee helps us “walk the talk” and drives various payments digitalization initiatives inside and outside the BSP.  These include the implementation of the National Retail Payments System (NRPS), the modernization of the RTGS system (PhilPASS), the adoption of ISO20022 standards, the systematic capture of payments-related data and statistics, the upgrade of our IT systems infrastructure, and the digitalization of our own internal payments and transfers.

This is the 3rd year of implementation of the ITMS and the second year of the DPTSC.  Most of you would have experienced firsthand some of the changes being made.  Some degree of discomfort at these changes is possible, perhaps even expected.  Perhaps you are wondering, why we are doing this and why all these changes are necessary.

These changes are necessary as we adapt I should say – better yet – not only adapt to but to thrive in -- the rapidly evolving financial and economic world.  The evolution of the space that we oversee is changing at a disruptive manner. And to stay on top of it, we must change.

According to a 2017 IMF paper on FinTech, artificial intelligence is continuously giving rise to new apps that provide services in payments, financing, asset management, insurance, and investment advice. This brings opportunities and challenges for consumers, financial institutions, and regulators. The paper cautions that it is not certain if these changes are evolutionary or revolutionary. It advises though that policymakers must be nimble, experimental, and cooperative.

Another adjective to describe these changes is: complex.  A recent Bain Consulting report states that the top 10-15 major enabling technologies - such as the Internet of Things, Artificial Intelligence, and Augmented Reality - are all very different from each other. This could lead to some exasperation and concern which could result in false starts, half measures, and disjointed efforts in policies that chase after "disruption”.  The paper suggests that there must be focus not just on the profound changes brought about by the digital technologies, but also on the “surprising and unexpected ways that people interact with technology”.  In other words, digital transformation is about both technology and people.  Thus, both technologists and HR experts must come together to work on ensuing challenges.

 In the midst of dealing with technology-driven innovation and disruption, the BSP will also need to balance the tradeoff between efficiency and stability which would occur from time to time.  There is, for us, the added balancing act of effectively managing risks to financial system stability and integrity, and allowing the prudent growth of digital financial services given the benefits that it could confer to our economy and its development aspirations.

At the BSP, we can choose to be enablers in managing digital transformation, we may even assume the lead in some areas of this journey… or we can choose to become a dampener of technological innovation, slowing down growth of digital financial services due to our inability to keep up.  We have made the choice…we will do the former:  we will be enablers in managing the digital transformation journey here at the BSP and in the economy.

In today’s IT Summit, we have invited the Chairman of a major financial institution as our first speaker.  His financial institution is one of the most earnest local banks in pursuing digital transformation.   Dr. Tito Ortiz of Union Bank will share with us the business drivers for their digital initiatives. Tito will share key strategies that Union Bank has pursued and lessons that they have learned since they started to embark on this journey 2 or 3 years ago.

Our next speaker will be our very own Assistant Governor Gerry Galvey from ITSS.  Gerry will provide an update on our various IT Modernization initiatives.  Gerry will also update us on the latest Information Systems Strategic Plan, or ISSP, our strategic IT roadmap for the next 5 years.  We will also learn what we can expect from ITSS in 2019, as well as their recommendations on how we can more effectively collaborate to accelerate digital transformation efforts.

Next, Mhel Plabasan will update us on the latest developments in key technologies and give us an overview of the local FinTech startup community. 

Our last speaker Mark Perez from the Supervisory Data Center will share some tips on effective user-IT collaboration.

As we listen to these technology discussions today, I would suggest you keep two (2) questions in mind;   “So what?,” and “Now what?”

 “So what?”…  When we hear buzzwords such as blockchain, artificial intelligence and augmented reality, it is easy to get caught in the hype.  We must pause and ask, “what does this mean for the BSP?”; “How will this contribute to our 2018-2023 Strategic Roadmap?”; “How will this make us more effective in our day-to-day work?”; "How can this enable us to better serve our different stakeholders?”.  Before we commit substantial time and resources to technology questions, we must be clear on the “So what?.”

Next, we must ask, “Now what?”  Some of the changes brought by technology will excite us.  Some may scare us.  Regardless of how we feel, we must act.  This requires that we put clear action plans, timetables, and project owners in place.  We must ensure proper execution of initiatives to realize desired benefits.  Importantly, it also requires that we build staff capability in digital competencies.   Each of us will need to ask ourselves how we can help bring about the required changes to avoid being obstacles to them.

In this regard, ITSS and the BSP Institute have already began the effort just by gathering BSP’s senior leadership in this Assembly hall.  For this, I thank ITSS and the BSPI.  I also thank each one of you for committing to scale up your digital competency.

I wish everyone a productive and enjoyable session.

Maraming salamat.