Philippines Competition

In the context of the R2A initiative, the Bangko Sentral ng Pilipinas (BSP, the Philippine Central Bank) has requested the development of an Application Programming Interface (API), and back office reporting and visualization application (the Project) to:

  1. Allow financial institutions to submit data digitally and automatically to the financial authority;
  2. Increase the volume, granularity, and frequency – and improve the quality – of data submitted to the central bank; and
  3. Enable BSP staff to improve data validation and analysis, and generate customized reports for supervisory and policy development purposes.

By improving data quality and access, and developing new tools for data visualization and analysis, the Project will help the BSP implement a risk-based supervisory approach that reduces compliance costs and promotes financial inclusion while ensuring financial stability and integrity. Moreover, the BSP will be able to capture crisper insights on the Filipino financial sector that will be used to develop policies such as the financial inclusion strategy.

The project will deliver a prototype rather than a complete, production-ready product. The prototype will be tested with two financial institutions and will treat data required for only a small subset of the required reports. This will enable R2A and BSP to test the feasibility of the prototype solution, address issues that arise, and better estimate the time and resources required to roll out a comprehensive solution to all licensed institutions.

The two institutions that will collaborate with R2A and BSP during the prototyping phase are:

  • Bank of the Philippine Islands (BPI), a locally-owned bank with more than 20 subsidiaries; and
  • JP Morgan Chase (JPMC), an international B2B bank.

The aim of this project is to develop a prototype for this solution by April 2018.

CURRENT PROCESSES

Most of the data analyzed by central banks to determine the health of supervised institutions and the overall financial sector come from reports that financial institutions submit to the financial authorities. Compliance reports are submitted using specifically created Excel spreadsheet templates that are transmitted via mail, e-mail, or web portals. Each financial institution must fill out multiple Excel spreadsheets on a daily, weekly, monthly, quarterly, or annual basis, depending upon the requirements set by the regulator for different types of data and firms. Filling out these spreadsheets is time-consuming for financial institutions and much of the data is duplicated across reports. Errors and delays – and therefore penalties – are common.

The BSP’s Supervisory Data Center (SDC) receives reports that are often incomplete, late, and/or inconsistent. Data cleaning and validation consumes significant resources. The e-mailing of compliance reports (and follow-up communication to address inconsistencies and errors) is inherently insecure. Web portals are a step in the right direction but still introduce a human security risk factor. The SDC transfers (and often aggregates) manual data from compliance reports into new Excel forms that are used by analysts, supervisors, and regulators. Any requests for additional information not included in the regular reports must be submitted to the SDC, which must then create a new report manually. Because the process is resource-intensive, the quantity of data that is actually analyzed is limited. These challenges are common to most central banks.

Through this project, R2A and BSP will develop an Application Programming Interface (API), and back office reporting and visualization application. This prototype will:

  1. Allow financial institutions to submit data digitally and automatically to the financial authority;
  2. Increase the volume, granularity, and frequency – and improve the quality – of data submitted to the central bank; and
  3. Enable BSP staff to improve data validation and analysis and generate customized reports for supervisory and policy development purposes.

The project will deliver a prototype rather than a fully-complete, production-ready product. The prototype will be tested with two financial institutions and will treat data required for only a small subset of the required reports. This will enable R2A and BSP to test the feasibility of the prototype solution, address issues that arise, and better estimate the time and resources required to roll out a comprehensive solution to all licensed institutions.

The two institutions that will collaborate with R2A and BSP during the prototyping phase are:

  • Bank of the Philippine Islands (BPI), a locally-owned bank with more than 20 subsidiaries; and
  • JP Morgan Chase (JPMC), an international B2B bank.

A full-fledged solution would provide the BSP with a greater volume of more granular and higher-quality data that would also be delivered more frequently by all supervised institutions. Through a system based on APIs and containerized or otherwise packaged client software, the BSP would be able to accept and process data sets from financial institutions without requiring them to produce Excel reports. The API and client software would enable each financial institution to push data into a warehouse at regular intervals and receive timely error messages for submitted data that does not pass validation.

Automation would allow for consistent and timely submission, which would dramatically reduce lateness and errors. Automation would also allow for the detection of duplicate submissions and mistakes when the data are pushed to the data warehouse, thereby giving the financial institution time to make corrections.

In addition, when regulations are issued or amended, generating reports from raw data would allow the BSP to make any required changes on their end without the need for constant revisions on side of the financial institutions.

The BSP would extract data in different ranges using SQL queries. All queries would be composable[1] and each step would be logged. From the data submitted, the SDC would be able to generate relevant reports automatically and quickly. Customized reports could be created by BSP staff without requiring the SDC’s intervention. Visualization software would allow for the creation of charts, graphs, and dashboards in near-real time so that the data could be presented in a more meaningful and digestible way. Data could be requested at much faster intervals (hourly even) so that more granular statistics and measurements could be generated. Ultimately, more data could be generated and analyzed.

Finally, data security would be dramatically improved since automated communications would be secured with industry-standard encryption, including any measures specifically called for by financial regulation. At a minimum, all communications would be secured with industry-standard SSL/TLS.

Qualifications for Innovators

Each project requires an organization with the capacity, relevant experience, and resources required to develop a prototype of a data request/storage platform and tools for data-driven metrics and insights. Key qualifications include the following:

  1. Demonstrated ability to build and/or integrate with large public-facing APIs, to intelligently design user interfaces for non-technical and technical customers, to properly write documentation, and to maintain an enterprise ecosystem.

  2. Experience with data analytics and building user-interactive applications.

  3. Institutional understanding of tech industry best practices and familiarity with industry-standard server-side and client-facing technologies.

  4. Ability to dedicate sufficient staff resources (e.g., developers, a designer and a project manager) throughout the prototype development and testing stage.

Project award

The successful applicant will:

  • Be awarded US$100,000 to develop and test the required solution. This is a fixed-sum grant award, which must cover all of the applicant’s expenses related to the development and testing work, including staff time, hardware, software, travel, and all other project-related expenses.

  • Participate in R2A working groups to be introduced to the global community of regulators and supervisors, investors, and academics that are partnering with R2A.

  • Be invited to participate in other events hosted by R2A partners to (a) understand the needs of emerging market financial authorities and (b) explore innovative solutions.

  • Be featured in the R2A website and publications as a pioneer within the emerging RegTech for Regulators community.

  • Benefit from association with prominent organizations such as the Bill & Melinda Gates Foundation, the Omidyar Network, and the US Agency for International Development, the three funders of R2A.

Information & Applications:

Please direct all questions about this initiative and your application to:  akasebele@bfaglobal.com.

 

[1] Composable queries promote the ability to pass data from a base query to an outer query, in essence chaining building blocks of a query together. This is a powerful way to build queries component-wise such that the amount of code needed is minimized and the performance is maximized. The primary benefit of composability is that the base query results may be further manipulated (e.g. filtered, paginated, sorted, merged, etc.) by an outer query.

 

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