Aboitiz-owned Union Bank of the Philippines (UnionBank) is still studying how to go about formally adopting digital banking in view of the central bank’s new category on online-only banks.
UnionBank senior vice president Henry R. Aguda said they have not yet applied for digital bank license with the Bangko Sentral ng Pilipinas (BSP) as of the present. “But we intend to,” he said during the bank’s E-Talktales on Wednesday.
Aguda is not sure when they will apply and could not say if it will be in 2021. There is also no decision yet if UnionBank will set up a spin off unit, or subsidiary, or even a full shift or conversion to digital banking space.
“All options are open and we have a team studying the best options for the bank. (It will) also depend on who the other competitors are. The details of which are still evolving,” he said.
In the meantime, Aguda said the bank is open and quite excited about the prospect of digital currency
taking off in the Philippines, hopefully led by the BSP when it issues its own central bank digital currency (CBDC).
“We’re watching it very closely,” said Aguda, particularly the way cryptocurrency or bitcoin technology is progressing and the ecosystem it will thrive on. However, he is concerned about the highly volatile nature of cryptocurrency. “We want to create a scenario where we have (all the) advantages (in the digital space) without volatility,” he said. Right now, there are issues hounding digital money such as the privacy aspect, efficiency and security.
“We’re optimistic,” said Aguda. “I wish the Philippines will be one of the first to launch this (in the region).”
BSP Governor Benjamin E. Diokno has said that he does not see a CBDC within his term, which will expire mid-2023. He made this comment based on a survey of central banks around the world that said they don’t see their own CBDCs within the next five years either.
“Very few central banks plan to issue CBDC in the next five years,” said Diokno earlier. But, he said that some central banks are conducting CBDC activities as part of contingency planning.
For now, the BSP is setting the stage for when the country has a requirement for a CBDC. It said the issuance would depend on whether there is a need for it and “the net benefit of the CBDC to the consumers, the financial market, and the Philippine economy results to higher efficiency gain compared to the existing electronic payments system.”
A BSP technical working group on CBDC was set up mid-2020 to take a look on the fundamental issues and also to study its variants such as retail CBDC, a wholesale CBDC, a token-based retail CBDC, or an account-based retail CBDC. Diokno seems to be looking at retail CBDCs more, which he said is more widely accessible.