COMMENTARY: Why the Philippines cannot afford to delay open finance

In debt no more

Most Filipinos don’t know that many financial institutions want to give them really cheaper loans.   

However, today it is not possible. Not because they’re high-risk. But because every time they file a loan application, online or in a branch, they’re treated like a total stranger.

The reality is that lenders have no way of seeing the full financial picture of many aspiring borrowers: their transaction history across many walks of their life, their cash flow, savings, or repayment behavior.

A worker may have years of steady salary credits. A small business owner may have reliable daily revenues. A freelancer may have a long record of paying bills on time. Yet these income flows and transactions remain invisible as only a tiny fraction (and most frequently none) of the real world financial life makes it to the credit bureau.

That’s the elephant problem at the heart of Philippine consumer credit. And the recently filed Open Finance and Consumer Data Empowerment Act of 2025, currently before Congress, may be the most consequential piece of legislation in addressing this.

The Act is a historic opportunity. It is not about some fancy jargon, but about a fundamental empowerment of Filipino consumers, giving back to the customers the right to use their full financial history to get fairer rates and better credit terms. The right to be a familiar and trusted face to the banking industry. 

Right now, paradoxically, that right doesn’t exist.

A factory worker with three years of on-time salary credits? Stranger. A sari-sari store owner with steady daily cash flow? Stranger. A Grab driver with thousands of completed trips and a spotless payment record? Stranger.

Because their financial information, which is genuinely their own financial and transactional data, lives locked up in someone else’s silos; locked inside a bank, an app, or an institution where other lenders can’t see it, even if the owner consents to provide this data.

When lenders can’t see a customer’s full financial information, they do what any rational actor does when faced with uncertainty: they charge more to cover the risk. Good customers end up picking up the bill for (unknown) bad actors.  

The author, Pavel Fedorov, is the co-founder of Salmon Group Ltd.

The new Open Finance bill is a historic watershed moment, which addresses exactly this dilemma, by letting customers bring their own financial history reputation with them whenever they approach a lender.

Every time you apply for credit, your salary history, payment behavior, savings pattern, and other indicators of financial responsibility can travel with you, but only with your consent, to any lender you choose.

Should this bill be enacted, millions of Filipinos would gain access to affordable formal credit with enormous economic benefits.

To put things in perspective: by some estimates, the unsecured consumer lending market in the Philippines, excluding credit cards, is approximately P1.54 trillion ($25 billion). Imagine if using these “siloed” personal data were to reduce effective borrowing costs by 50%; from the currently prevailing rates to what we see in other markets across Southeast Asia.

The net benefits to Filipino borrowers could collectively save as much as P775 billion a year in interest payments.

How much is this? That’s roughly equivalent to the country’s annual social protection budget, the fund that supports welfare programs for Filipinos, including the 4Ps conditional cash transfer program. It’s double the national healthcare budget.

It’s enough to put around P10,000 back into the pocket of every adult Filipino annually. That is the enormous scale of savings that fairer access to credit could potentially unlock.

The Philippines has already built something impressive: digital payments and digital banks reaching tens of millions of Filipinos, and a BSP that has led the region in fintech regulation. Open Finance is what completes the picture.

The technology is ready. The economic case is compelling. The consumer benefit is undeniable.

Now all that remains is for Congress to pass this bill. Give Filipinos control over their own financial data. Build a credit market that rewards responsibility. Drive down the cost of borrowing.   

It’s not simple, but it’s necessary. It’s long overdue. Are we sure we have luxury of waiting? With the magnitude of the problem, my personal view is that we do not. We should act now. 

In debt no more!

Editor’s Note: This article from Salmon is published independently from our Editorial Newsroom.

About the Author: Pavel Fedorov is the co-founder of Salmon Group Ltd., a technology-driven holding company building a banking and lending platform across Southeast Asia, starting with the Philippines. Since 2022, he has led Salmon’s mission to expand access to modern financial services for underserved populations across Southeast Asia. Before co-founding Salmon, Fedorov built an extensive international career in financial services, including senior leadership roles at major institutions across London, Moscow and Dubai.