The Market Monitor Minding the Nation's Business
The Bangko Sentral ng Pilipinas (BSP) has reported that both new players and incumbent banks have shown interest in obtaining licenses to operate as digital banks in the Philippines.
“There are new players exploring opportunities in the Philippine market, but as per our guidelines, we will begin accepting applications from January 1, 2025,” said Melchor Plabasan, BSP Senior Director for Technology Risk & Innovation Supervision, during the 2024 BSP-International Monetary Fund Systemic Risk Dialogue on Wednesday.
In addition to attracting new market players, Plabasan noted that the BSP is reviewing which existing digicentric institutions are operating in a manner consistent with a digital bank.
“If an institution is already functioning like a digital bank, it should be regulated as one, not as a rural or thrift bank. Our goal is to minimize regulatory arbitrage,” he explained.
Institutions found to meet the criteria for a digital bank will be required to transition their licenses, he added. This transition would require institutions to meet the regulatory requirements for digital banks, including the mandated capital of PHP 1 billion and other prudential standards.
In August, the BSP lifted its moratorium on issuing new digital banking licenses. Starting January 1, 2025, the BSP will resume granting these licenses, though it will limit the total number of digital banks in the country to a maximum of 10. Of the remaining slots, four will be available for new entrants, while the rest will be allocated for the conversion of existing bank licenses to digital bank licenses.
“There are existing players that wish to convert their licenses to digital banks, and we’ve also seen interest from foreign players looking to enter the market. We’ve already received inquiries regarding legal and regulatory requirements,” Plabasan said.
The BSP expects to complete its assessment of current applicants by January 1, 2025, with chartering anticipated to take three to four months.
Currently, six digital banks are operating in the Philippines: GoTyme Bank, Maya Bank, Overseas Filipino Bank, UnionDigital Bank, UNObank, and Tonik Digital Bank.