Ban on new digital banks lifted in 2025

MANILA, Philippines —  The Bangko Sentral ng Pilipinas (BSP) will lift the moratorium imposed on the granting of digital banking licenses starting Jan. 1, 2025, but will only permit a maximum of 10 digital banks to operate in the country.

“With this limit, the BSP can closely monitor developments in the digital banking industry, obtain a broader perspective as these banks mature further in their operations, as well as assess the impact of the entry of new players on the banking system,” BSP Governor Eli Remolona Jr. said in a statement.

By lifting the ban, the central bank said it aims to continuously harness digital lenders’ potential to positively impact the Philippine financial system while remaining sensitive to their attendant risks.

The issuance of new digital bank licenses includes converting an existing bank’s license to a digital bank license.

Six digital banks are currently operating in the Philippines since the issuance of the Digital Banking Framework in December 2020. Thus, lifting the moratorium will only accommodate four additional licenses, coming from either new or converting banks.

The BSP previously granted digital banking licenses to Maya Bank, Overseas Filipino Bank Inc., Tonik Digital Bank Inc., UNObank Inc., UnionDigital Bank and GOtyme Bank Corp.

According to Remolona, digital bank applicants must bring something new to the table.

“We want to see unique product and service offerings that are different from those offered by the existing market players. These offerings should have significant potential to reach broader clientele, particularly the untapped or underserved market segments,” he said.

In opening the application window, the BSP said it would look into digital bank applicants’ value propositions, business models and resource capabilities. It will also look into their compliance with the standard licensing criteria.

The standard licensing criteria include the assessment of the transparency of banks’ ownership and control structure, suitability of shareholders, fitness and propriety of directors and senior management, adequacy of capital, as well as banks’ strategic and operating plan, including an appropriate system of corporate governance and risk management.

“Only digital bank applicants that have demonstrated capacity to meet the minimum criteria and offer a unique value proposition, or develop new and innovative business models that are currently not offered or accessed by existing players, will be granted a digital banking license,” the BSP said.

The new applicants should also display sufficient capabilities to deploy digital solutions and sustainably grow their business within the Philippine setting.

Remolona said their decision to lift the ban stemmed from their assessment of the operations of digital banks in the Philippines.