MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is likely to lift the limit on the number of fully digital banks in the country as more lenders plan to venture into the digital space.
Under the framework approved by the Monetary Board, the number of digital-only banks allowed to operate in the country is initially limited to five.
A digital-only bank is defined as a bank that offers financial products and services that are processed end-to-end through a digital platform and electronic channels with no physical branches offering financial products and services. Based on the BSP guideline, the required minimum capitalization of a digital bank is P1 billion.
BSP Governor Benjamin Diokno told participants of the 2021 BSP Youth Summit that the limit can be modified or lifted by the Monetary Board as new evidence becomes available.
“The limit on digital banking licenses allows the BSP to assess the financial performance of digital banks and their impact to existing banks and the banking system and their effectiveness in achieving the BSP’s financial inclusion goals,” Diokno said.
The BSP chief said the regulator needs to strike a balance between promoting an enabling environment for financial innovations on one hand and ensuring safety and soundness of individual financial institutions and the entire system, as well as protection of consumers on the other hand.
The Monetary Board has so far approved the application of three banks – Overseas Filipino Bank, Tonik Digital Bank and UNObank – to operate as digital-only banks in the country.
BSP Deputy Governor Chuchi Fonacier earlier said the regulator is evaluating three applications for digital bank license, while another company has also expressed interest.
Entities with pending applications are: Aboitiz-led Union Bank of the Philippines, Voyager Innovations (PayMaya) and a foreign entity.
Likewise, Philippine National Bank (PNB) is tapping Allied Integrated Holdings Inc. (formerly PNB Savings Bank) as vehicle in its foray into the country’s digital banking space.
The BSP issued in December last year Circular 1105 recognizing digital bank as a new bank category, which is separate and distinct from the existing bank classifications.