BSP Opens 4 New Digital Bank Licenses, Drawing Interest from Local and Foreign Players

MANILA – A mix of new entrants and incumbent banks looking to convert their existing licenses are eager to secure one of the four additional digital bank licenses that the Bangko Sentral ng Pilipinas (BSP) will start offering on January 1, 2025.

The lifting of the moratorium limiting digital bank licenses to six was approved by the BSP’s Monetary Board in August, increasing the total number of licenses to 10.

Interest from Various Players

Melchor Plabasan, BSP Technology Risk and Innovation Supervision Department director, revealed that institutions are already inquiring about the legal and regulatory requirements.

“There are new players interested in entering the Philippine market,” Plabasan said during the BSP-IMF Systemic Risk Dialogue. “We’re also identifying digicentric institutions that are effectively operating as digital banks to transition their licenses.”

Requirements for Digital Bank Licenses

To qualify as a digital bank, applicants must:

• Operate financial services fully through digital platforms with no physical branches.
• Meet a minimum capitalization requirement of P1 billion.
• Comply with fiduciary rules similar to those imposed on other bank categories.

Plabasan emphasized that institutions acting as digital banks, such as rural or thrift banks offering similar services, should align with the proper regulatory framework to minimize arbitrage.

Sector Challenges and Opportunities

BSP Governor Eli Remolona Jr. highlighted the need for innovation in digital banking, particularly in the area of loan offerings.

“We think we could use other business models in terms of digital banks. Some incumbents are struggling with making loans online,” Remolona said. “We’re looking at candidates with promising business models to address this gap.”

Existing Digital Banks

The six digital banks already operating in the Philippines include:

1. GOTyme
2. Maya Bank
3. Overseas Filipino Bank (OFBank)
4. Tonik Bank (Singapore-based)
5. UNObank (Singapore-based)
6. UnionDigital (Union Bank of the Philippines).

While these banks have excelled in collecting deposits online, many face challenges in effectively managing online loans, according to Remolona.

Looking Ahead

Assuming the applicants fulfill the regulatory requirements, the new digital banks are expected to commence operations within 2025. This expansion aims to foster greater innovation and competition in the digital banking sector, which has become a critical component of the country’s financial ecosystem.