The increasing incidents of online fraud affecting Philippine banks is a serious threat that needs to be addressed by the Bangko Sentral ng Pilipinas (BSP), senatorial candidate and incumbent Sorsogon Gov. Chiz Escudero said.
Escudero, who used to chair the Senate Committee on Banks, Financial Institutions and Currencies, said the BSP needs to go beyond the occasional fraud investigation and establish policies that will ensure all commercial, rural, thrift and digital banks have the infrastructure to protect their clients.
“As institutions imbued with public trust, banks have the responsibility to protect their clients’ data and resources. But the breach of banks’ security systems, which we have repeatedly seen for several years now, shows that the digital infrastructure needed to do that is grossly lacking,” Escudero said.
“The BSP needs to put in place policies that will address this weakness in banking systems if it wants to promote financial inclusion through digital banking and digital payments. How can you expect people to try online banking and digital payments when they are not confident of the banks’ ability to protect them?” he said.
Some 700 clients of BDO Unibank Inc. have lost money in a massive breach of its 10-year-old web service—supposedly due for phaseout—that allowed hackers to move BDO depositors’ money to the UnionBank account of a certain “Mark Nagoyo”. BDO is processing the return of funds to the affected accounts.
In 2019, Metrobank—among other banks—fell victim to a sophisticated cyberattack that was able to intercept codes sent to customers via SMS to verify transactions. In 2017, the Bank of the Philippine Islands blamed technical glitches that wrongly debited funds from its depositors’ accounts. Security Bank, Land Bank of the Philippines and BDO have reported similar cases.
“The way we do banking has evolved, and the challenges have evolved as well. The BSP can and must look at long-term interventions, including incentives and penalties, that will push banks to strengthen their security and information systems. This should be a priority as we transition to digital platforms,” Escudero said.
He said the BSP is mandated by law to establish standards for operations of banks according to what it deems to be sound practices and necessary interventions.
“Now would be a good time for the BSP to examine how to make banking work in a digitally driven era that comes with as many risks as there are benefits,” Escudero said. #
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