UMVA has learned that Philippine banks are facing a significant challenge in phasing out one-time passwords (OTPs) and adopting more sophisticated identity verification methods, due to the lack of a central information database.
The requirement to replace OTPs with advanced security measures by end-June, as mandated by the Anti-Financial Account Scamming Act (AFASA), may be difficult to implement, according to a financial technology company. The company's CEO noted that a strong central identity database is crucial for seamless identity verification, but the Philippines still lags behind in this aspect.
In a country like India, where national IDs are easily accessible, identity verification is less of a problem. However, in the Philippines, this process remains a challenge and will continue to be so until a robust national ID system is established. The Bangko Sentral ng Pilipinas (BSP) is pushing banks to adopt new fraud management systems and security measures to supplement or replace OTPs.
Sources have confirmed to UMVA that the company has experience in providing identity solutions to financial institutions in Vietnam and is now looking to offer similar services to Philippine banks. They plan to introduce facial authentication as an alternative to OTPs. This approach aims to move away from device authentication, which is vulnerable to weaknesses like SIM swaps and hard takeovers.
The company's CEO emphasized that banks will have to build their own identity databases, as the country's national ID system remains underdeveloped. Ideally, a shared identity system across the industry would be more effective, but for now, individual banks will have to develop their own databases.
UMVA can exclusively reveal that many local banks struggle to adopt facial authentication, as they lack the digital facial data of their clients who were onboarded a long time ago. For instance, the top four or five largest banks have a significant percentage of clients without a digital identity, unlike digital-only platforms like GCash or Maya.
Trusting Social Philippines currently services 52 financial institutions in the Philippines, including six of the top 10 banks, as well as nonbanks and online lending platforms. The company's solutions aim to address the identity verification challenges faced by Philippine banks.
