New digital banks offer purely online services

The Bangko Sentral ng Pilipinas (BSP) has allowed Tonik Digital Bank and UNObank to operate as digital banks, bringing to three the number of financial companies in the new bank classification.

Tonik Digital Bank, a unit of Singapore-based Tonik Financial, was granted a license to operate as a rural bank in the Philippines in December 2019.

Tonik offers its products and services 100% online, contrary to traditional banks that maintain physical branches. It offers accessible, flexible and inclusive financial services, including industry-leading deposit interest rates of up to six percent per annum, and unique saving features.

It has secured over P1 billion in retail deposits just a few months after it launched a mobile platform offering game-changing deposit interest rates of up to six percent per annum for time deposits.

On the other hand, UNObank – operated by Singapore’s DigibankAsia – is working with cloud banking provider Mambu and Amazon Web Services for its operations in the Philippines.

UNO’s banking platform Cognito incorporates artificial intelligence at its core of its operations.

Last April, the   Monetary Board approved the digital bank license of the Overseas Filipino Bank, a subsidiary of Land Bank of the Philippines.

The BSP issued Circular   1105 in December last year, recognizing digital bank as a new bank category that is separate and distinct from the existing bank classifications. It 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.

The guidelines placed minimum capitalization of digital banks at P1 billion. The Monetary Board agreed to limit the number of digital banks initially at five.

The BSP implemented a Digital Payments Transformation Roadmap that aims to convert 50% of retail transactions to electronic channels and raise the number of Filipinos having financial accounts to 70% by 2023.

With consumer behavior changing during the pandemic, Diokno is confident the goals would be achieved “before the end of 2022.”