Rural banks in PH want the Bangko Sentral to revisit digital banking rules
The Bangko Sentral ng Pilipinas (BSP) played a vital role in the evolution of the Fintech industry. As early as 2000, the BSP allowed banks to engage in electronic banking to improve financial access. However, it was only in the years leading up to the COVID-19 pandemic that most banks incorporated online banking to cater to the growing share of Filipinos owning smartphones.
Through their devices, Filipinos can easily open bank accounts online and access them easily without having to step into a bank branch. Among Fintech companies, GCash pioneered money remittances nationwide by turning mobile phones into an e-wallet using their app.
Meanwhile, rural banks are urging the Bangko Sentral to revisit proposed prudential rules for technology-driven rural banks, warning that some provisions could unintentionally discourage digitalization and weaken financial inclusion efforts in the countryside.
The Rural Bankers Association of the Philippines (RBAP), in a position paper submitted to the BSP, said it supports the regulator’s push to advance financial inclusion through a more digital economy but raised strong reservations over specific regulatory thresholds and capital requirements.
“We fully agree that prudential standards should remain proportionate to the evolving risk profile of rural banks as they transition toward more technology-enabled operations,” the RBAP said.
“However, we hold strong reservations against the manner in which the digitalization of rural banks is proposed to be carried out,” it added.
Among the concerns raised by RBAP is the BSP’s proposal to classify full digital onboarding capability as an indicator of operational complexity, which could trigger higher prudential requirements. The association said the approach might be too broad and should instead consider whether such capability materially changes a bank’s risk profile.
RBAP also questioned the proposed 30-percent threshold on customer accounts located outside a rural bank’s physical areas of operation. It said the rule may be difficult to implement and could create unintended consequences. The association noted uncertainties over how “physical areas of operations” would be defined, warning that strict geographic limitations could reduce access to formal financial services, especially in border areas or regions with mobile populations.
The Bangko Sentral ng Pilipinas, the nation’s central bank, regulates all banks in the country. Philippine banks are classified as universal, commercial, thrift, rural, cooperative, and Islamic banks. Universal banks offer a wide range of services, including investment, commercial and development banking, mutual funds, and housing loans.
Commercial banks—privately owned institutions—are the largest financial group and most popular among customers for their extensive service offerings. Expanded financial inclusion measures have improved Filipinos’ access to a diverse range of financial services beyond traditional banking. Digital banks and e-money platforms are positioned to further strengthen the Philippine banking infrastructure.
How it works
ChatGPT, or Chat Generative Pre-Trained Transformer, can expertly generate realistic, human-like text about almost anything. English essays, news articles, computer code, and songs are all examples of what this bot can produce, and all from a simple prompt.
The bot uses a dialogue format in which users can provide both simple and complex instructions, to which ChatGPT will provide a detailed response. It can also answer follow-up questions, admit when it made a mistake, challenge incorrect premises, and reject inappropriate requests—all of which makes it perfect for customer service.
The artificial intelligence research non-profit company behind ChatGPT, OpenAI, was founded in 2015 by Elon Musk, Sam Altman (right), and other Silicon Valley investors. Due to a conflict of interest between OpenAI and the autonomous driving research done with Tesla, Musk stepped down from the board in 2018, but remains an investor, and one who was excited for the launch.
Made available to the public on November 30, 2022, on OpenAI’s website, anyone can sign up for and use ChatGPT for free. The software hit one million users less than a week after its launch. No software has ever been able to so convincingly provide human-like, detailed answers to inquiries as ChatGPT.
A threat to programmers
Because ChatGPT has been able to generate intricate Python code, and programmers have used it to solve coding challenges in obscure programming languages in a matter of seconds, as News18 reports, concerns are arising that such technology can replace human workers.
ChatGPT can create written content very convincingly, concerning everyone from journalists to playwrights. Many fear that the bot will take away jobs from writers and creatives. Fortunately, as per a report by The Guardian, the chatbot currently still lacks the nuance, critical-thinking skills, and ethical decision-making ability required for journalism.
Plus, its current knowledge base stops at 2021, meaning it has a limited knowledge of world events after that. With the power to simply put in a prompt and get ChatGPT to write convincing college-level essays, many schools are concerned about an uptick in plagiarism. Some schools are already blocking the site from their networks and servers.
A tool to detect ChatGPT
Somewhat surprisingly, it was a 22-year-old computer science student at Princeton University, Edward Tian, who developed an app called GPTZero which can detect when an essay was written by AI. It works by looking at two variables, perplexity and “burstiness,” and assigns each of those variables a score.
GPTZero measures firstly how familiar it is with the text presented—according to the sources it was trained upon—and the less familiar it is, the higher the perplexity, meaning it’s more likely human-written. Burstiness is then measured by seeing how variable the text is—checking for varied sentence length.
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Reference: What exactly is ChatGPT, and what are the concerns?
