3 big banks applying for digital bank license

Published June 14, 2021, 5:07 PM

by Lee C. Chipongian

There are now three commercial banks that are applying for digital bank license, according to Bangko Sentral ng Pilipinas (BSP) officials.

Aboitiz-led Union Bank of the Philippines (UnionBank) is one of these three applicants, plus two other commercial banks.

BSP Deputy Governor Chuchi G. Fonacier said Union Bank’s application is ongoing “and currently in process”.

“So far, one commercial bank has applied in partnership with a foreign investor,” she said over the weekend. This recent applicant is however not Rizal Commercial Banking Corp. (RCBC) or foreign bank, Dutch ING, said Fonacier. Both RCBC and ING have expressed interests to apply for digital bank license.

“One other bank is currently engaging BSP for possible application,” she said. She added that there is one more entity or a financial company that is also applying for digital bank license.

In an interview with ANC, BSP Governor Benjamin E. Diokno identified the Gokongwei Group which operates Robinsons Bank Corp., as one of the three commercial banks applying for digital bank license.

The BSP has already granted three digital bank license to three entities, two were originally approved as a thrift bank and rural bank, and one is a financial technology or fintech company.

The first official digital bank in the Philippines is government-owned Overseas Filipino Bank, which converted its thrift bank license to a digital bank license last March. The second digital bank license approved is Tonik Digital Bank, a Singapore bank, which has an existing rural bank license here. Existing banks converting to digital banks should complete the transition within three years from date of acquiring a Monetary Board approval.

The most recent digital bank that has been BSP-approved to process a digital bank license is another Singapore bank, UNOBank which is a fintech and a new player.

UnionBank’s CFO and treasurer, Jose Emmanuel Hilado, is hoping to get a BSP digital bank license soon. He said the bank’s application is “not yet” approved, but they could be the first big bank to spin off a fully-operating digital bank.

The bank, which for three days until Monday (June 14) was dealing with a systems glitch that left thousands of clients with floating interbank fund transfers, is accelerating their digital banking expansion to get a firmer foothold of the digital market before the foreign banks start coming.

The central bank issued Circular No. 1105 last November 2020 for the establishment of digital banks which is the BSP’s seventh bank category. A digital bank license requires at least P1 billion capital base.

Digital banks will have minimal or zero-reliance on physical touchpoints but it will have to set up one office as central hub in the Philippines to receive and resolve customer complaints.