A Chatbot Named BOB and Other Consumer Protection Measures in the Philippines

FinDev Gateway: I understand that BSP has recently adopted a more customer-centric approach to consumer protection, with a focus on customer outcomes or results, instead of focusing primarily on provider compliance with tick-the-box requirements. Can you tell me a little bit about how this evolution has happened, and what it means for BSP? What is a customer-centric approach to consumer protection?

Atty. Charina B. De Vera-Yap: Consumer protection regulations are often crafted using legal jargon or patterned after prudential rules that focus on the safety and soundness of a financial service provider (FSP). A customer-centric approach to consumer protection puts consumers’ interests and welfare at the front and center of policymaking and regulation. 

Like many central banks, the regulatory approach of the Bangko Sentral ng Pilipinas evolved from purely compliance-based to risk-based supervision. Our consumer protection policies mirrored this transformation.

In 2006, we set up a small unit to assist the public with their complaints about those FSPs which are under BSP oversight. As the volume of complaints grew, we felt the need for a policy that could push supervised entities to address consumer concerns. Thus in 2014, we issued the first Financial Consumer Protection Framework, embodied in Circular 857 – a detailed, compliance-oriented policy mandating supervised entities to adhere to the five standards of conduct of transparency and disclosure, fair treatment, privacy of client information, effective redress, and financial education and awareness.

Recognizing the need to keep abreast with innovations in financial services and products as well as changes in supervisory approaches, in 2019 we amended Circular 857 to become a principles-based regulation, Circular 1048. The updated framework provided more flexibility for supervised entities to structure their Consumer Protection Risk Management System more proportionately to the size, nature and complexity of their operations. The standards of conduct in Circular 857 were echoed in Circular 1048, albeit with more emphasis on the core principle of “do no harm” to consumers.

A landmark law for consumer protection in the Philippines

FinDev: Last year, the Philippines passed the Financial Products and Services Consumer Protection Act. How is the BSP working to translate this act into regulation?

Charina: This law, enacted on 06 May 2022, is a milestone. It gives express legal authority for financial regulators like the BSP to protect the interests of financial consumers under conditions of transparency, fair and sound market conduct, and fair, reasonable and effective handling of financial consumer disputes.

The passage of the law was the product of BSP’s collaboration with its fellow Financial Regulators, namely the Securities and Exchange Commission, Insurance Commission and Cooperative Development Authority. Given the delineation of our jurisdictions and covered entities, we agreed to issue separate regulations to implement the law while continuing to work together to ensure aligned approaches.  We would keep communication lines open, establishing an inter-regulator coordination mechanism where cross-cutting issues can be collaboratively resolved.

To date, the BSP has issued two Circulars - 1160 and 1169 - as part of the suite of regulations that implement the Act’s various provisions. These issuances were informed by expert inputs from international partners like the World Bank and enriched by suggestions from our prudential supervision team.

We are also in the process of formulating a third circular, focused on market conduct supervision and examination.

Monitoring the market through artificial intelligence and suptech tools

FinDev: Can you tell us about the chatbot that the BSP has implemented to help with consumer complaints? What are you using it for, and how has it been working?

Charina: The chatbot, named BOB or BSP Online Buddy, is the primary channel of the BSP Consumer Assistance Mechanism. BOB is powered by AI and natural language processing technology, allowing it to converse with complainants in English, Filipino and Taglish. BOB was designed to provide the public with wider access to engage with the BSP through several touchpoints. BOB is available 24/7, accessible via webchat on the BSP website, SMS and via Messenger on the BSP Facebook page.

BOB, launched in 2020 amidst the pandemic, has revolutionized the way we receive and process complaints. In the course of BOB’s conversation with users, it captures complaints narratives, filters valid complaints, and automatically pushes them to accountable senior officers of FSPs who are mandated to respond to complainants within set timelines.  

In 2022, 75 percent of the complaints processed through the BSP Consumer Assistance Mechanism were directly lodged by complainants via BOB. The rest were received through traditional channels like regular mail, e-mail, voice call and walk-in kiosk.  We retained these channels for customer redress to ensure that other segments of the public who are more comfortable using these traditional channels may still reach out to the BSP. Complaints received from these traditional channels can even be uploaded and referred to FSPs through BOB’s back-end digital interface, thus eliminating some manual processes.

This process allows us to have a view of all complaints that consumers escalate to the BSP, facilitating complaints data generation and analysis. We intend to maximize this functionality as we begin to implement our market conduct supervision functions.

FinDev: You have also begun to engage in market monitoring through a range of tools. Can you share with us why and how you are doing this, and how it will help with your consumer protection work?

Charina: At this point in time, our market monitoring is mostly informed by the complaints that get escalated and recorded in BOB’s platform, as well as insights from the periodic reports coming from our supervised entities. The visibility given by BOB gives better insight into customer experiences and business practices, which inform our consumer protection policy formulation and consumer education initiatives.

We are in the nascent stages of utilizing suptech tools, such as webscraping, sentiment analysis and topic modeling. Webscraping refers to the process of extracting and/or combining information or data from the Web in a systematic and automated way. Sentiment analysis (also known as opinion mining) involves analyzing text, such as reviews, comments, or social media posts, to determine whether the expressed sentiment is positive, negative, or neutral. Topic modeling is a method used to help find and understand the main subjects or themes present in a big collection of documents or texts, analyzing documents to learn meaningful patterns of words. These tools will help us to monitor consumer issues and risks from publicly available data.

Moving forward, we aim to set all pieces – policy, regulatory reports, suptech tools and supervisory activities – in place and running so we can better protect Filipino consumers.  

Related Content

This interview was conducted as part of our media partnership for the Responsible Finance Forum organized by the Center for Financial inclusion. For additional content related to this conference, please see below:

• Why We Need a Responsible Digital Finance Ecosystem, FinDev Interview with Eric Duflos of CGAP

• Guide to Financial Consumer Protection in the Digital Era

• Financial Inclusion and Climate Action: An Emerging Policy and Advocacy Agenda, FinDev Interview with Peter McConaghy of UNSGSA