The Bangko Sentral ng Pilipinas (BSP) is expected to complete its review of two more local-owned banks applying for digital bank license next week, the last two slots for authorized digital banks in the country which has been limited to just seven banks.
“There are two more in the pipeline. One is an existing bank converting to digital bank. The other is a local player forming a digital bank,” said BSP Deputy Governor Chuchi G. Fonacier.
Large lenders Philippine National Bank and Rizal Commercial Banking Corp. are two banks that earlier stated their interests of putting up their own digital banks as separate units from the regular bank.
Any existing banks applying to shift to digital banking, once approved by the BSP, are given three years to complete conversions including the closure of branches or branch lite units.
BSP Governor Benjamin E. Diokno last Thursday announced that they will no longer accept applications for digital bank license on September 1 and the BSP will close the window for three
Diokno said the Monetary Board has decided that day (August 19) that they will limit the number of digital banks to enable them to closely monitor and “gain experience” on the supervision of digital banks.
He said however that they will lift the moratorium on digital bank license applications if they have assessed a need for additional digital banks. But for now, seven is enough digital banks for the Philippine market.
Diokno signed BSP Memorandum No. M-2021-046 on August 19, closing the application window for new digital banks including converting banks. The window for digital bank license application will be closed until 2024.
The BSP has already granted five digital bank licenses. The new digital banks are UNObank, UnionDigital of Union Bank Corp. and GOtyme.
The first two digital banks approved were conversions such as the government-owned Overseas Filipino Bank and Tonik Bank – both have existing licenses as thrift and rural banks. Tonik Bank and UNOBank are both Singaporean banks while GOtyme is a partnership between JG Summit Holdings and a South African banking group.
Diokno said there may not be enough time for new applicants to submit all required documents before August 31. All applications are on a first-come, first-served basis. The applications received on or before August 31 with documentary deficiencies or which do not meet the BSP’s pre-qualification criteria will not be processed.
Digital banking business is expected to accelerate its growth in the next three years and especially in 2022 with the expansion in digital payments, and the introduction of new banking and finance products for online-only customers.
Digital banking is also seen to spur and boost the BSP’s efforts to promote and expand financial inclusion in the country and it is a crucial development in promoting innovation, cyber resilience, and in advancing the country’s financial sector digitalization, said Diokno.