Contemporary financial systems

I LIKE cash transactions.

The exchange of cash for goods and/or services is simple and as far as I am concerned, reliable. There is an absence of stress.

On the other hand, a cashless financial transaction is fraught with tension. Will it work? Will my personal data be compromised?

The recent announcement from Bangko Sentral ng Pilipinas (BSP) that it wishes to transform the country from a cash-heavy into a cash-light economy and a coinless society over the next five years invites a response.

My belief is that BSP is putting the cart before the horse. A cash-light economy may be desirable but in order to achieve this we need cashless transactions which are safe and reliable.

Which we do not have.

Instead, we have an increasingly stressful and adversarial relationship with financial institutions.

Last week’s editorial in a national broadsheet describing a data breach involving online lending app Cashalo adds to our concerns. The National Privacy Commission (NPC) said that its investigation showed that users’ data was successfully downloaded from Cashalo’s database. Cashalo claimed that no customer account or password had been compromised in the data breach, even though it was reported that the customer information said to have been illegally accessed included the names, email addresses, phone numbers and encrypted passwords of Cashalo customers.

There is a credibility gap here.

The editorial went on to say:

“This incident exposes the weaknesses in the cyber-security systems of many local companies”.

BSP has recently appointed a new deputy governor, Mamerto Tangonan, who has expertise in digital payments.

We believe that BSP should be given greater authority than it has at present. Too many financial institutions take inappropriate refuge in, for example, the Bank Secrecy Act to avoid full-scale investigations of what is going on.

One family member, a Millennial, was initially fond of fintech systems. Now he is not so sure. Already, he has experienced two problematic transactions with GCash. Fortunately, its management reacted quickly to the problems.

But stress levels are increasing.

More effort needs to be made before we can be confident that the digital economy is to be trusted./PN