5 banks to seek digital banking license

MANILA, Philippines — At least five banks are planning to apply for a digital bank license as part of efforts to improve the accessibility of financial products to Filipinos, according to the Bangko Sentral ng Pilipinas.

BSP Deputy Governor Chuchi Fonacier said the BSP has received five inquiries so far since it issued the guidelines on the establishment of digital banks via Circular 1105 issued last Dec. 2.

“Five inquired so far. No formal application filed yet,” Fonacier told The STAR.

A digital bank offers financial products and services that are processed end-to-end through a digital platform with no physical branch offering financial products and services.

According to the BSP, digital banks must have a minimum capitalization of P1 billion.

BSP Governor Benjamin Diokno has said digital banks could help address the frequently cited constraints to delivering financial services to the unbanked and underserved sectors.

“The Monetary Board may limit the total number of digital banks that may be established, taking into account the total number of applications received and the assessment of the overall banking situation,” Diokno stated in the circular.

Digital banks are subject to the prudential requirements of the BSP, including corporate governance and risk management, particularly on information technology and cybersecurity, outsourcing, consumer protection and anti-money laundering and combating the financing of terrorism.

The new players are required to maintain a head office in the Philippines to serve as the main point of contact for stakeholders and regulators. Digital banks may be able to grant loans; accept savings, time deposits, and foreign currency deposits; invest in bonds and other debt securities, commercial papers and accounts receivables, drafts, bills of exchange, or notes arising from a commercial transaction; issue credit cards; buy and sell foreign exchange; issue electronic money products; and sell and service microinsurance products.

“In transitioning to the new economy, digital transformation plays a significant role in reshaping the banking system’s overall landscape into a more efficient, technology-driven and inclusive financial ecosystem,” Diokno said earlier.

Under a three-year digital payments transformation roadmap, the central bank hopes to shift at least 50 percent of total transactions to digital channels and double the number of Filipino adults with transactional accounts to 70 percent by 2023.

“Thus, licensing of digital banks will bring us closer to our goal,” Diokno said.