BSP Eyes Modifications on Digital Banking License Limit

More and more lenders are looking to enter into the digital space, which is why the Bangko Sentral ng Pilipinas (BSP) is considering lifting the limit on the number of fully digital banks in the country.

Initially, there are only five digital-only banks allowed to operate in the Philippines under the current framework that was approved by the Monetary Board.

A bank may be considered fully digital if its financial products and services are offered and processed through a digital platform without any physical branches. Additionally, a digital bank should have a minimum capitalization of ₱1 billion based on BSP guidelines.

“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,” explained BSP Governor Benjamin Diokno.

He added that there is a balance that has to be struck between creating an environment for financial innovations and ensuring the safety of the entire system from financial institutions to the consumers.

So far, the Monetary Board has already approved three banks to operate as digital-only banks. These are Overseas Filipino Bank, Tonik Digital Bank, and UNObank.

There are also three applications for a digital banking license still up for deliberation, according to BSP Deputy Governor Chuchi Fonacier. Union Bank of the Philippines, Voyager Innovations (PayMaya), and a foreign entity all have pending applications.

Source: PhilStar