The Philippine central bank said it is set to start accepting new applicants for digital banking licenses by January 1, 2025.
The Bangko Sentral ng Pilipinas (BSP) said new players and incumbent banks have expressed interest in securing a license to operate as digital banks, Philippine state media reported.
“There are new players that are exploring and are interested to enter the Philippine market, but based on our issuance, we will only start accepting new applicants by January 1, 2025,” BSP Senior Director for Technology Risk & Innovation Supervision Melchor Plabasan said on the sidelines of the 2024 BSP-International Monetary Fund Systemic Risk Dialogue here on Wednesday.
Aside from the entry of new players, Plabasan said the BSP is also determining which among the “digicentric” institutions now can be considered as operating like a digital bank.
“So we can also transition their license from, let’s say rural bank or thrift bank, to digital bank. Because if you’re already behaving like a digital bank, you should be regulated like a digital bank, not a rural bank. That’s why the intention really is to minimize the arbitrage,” he added.
If the BSP has a basis to convert their license, they will be required to do so, Plabasan said.
He added that this means all the requirements for digital banks will have to be complied with by these institutions like the 1 billion capital and other prudential requirements.
In August, the BSP announced that it has lifted the moratorium on issuing new digital banking licenses.
Starting Jan. 1, 2025, the BSP will resume granting licenses to digital banks.
The BSP, however, will only accommodate four licenses as it only limits a maximum of 10 digital banks to operate in the country.
For the four remaining slots, the BSP allows the conversion of an existing bank license to digital bank licenses.
“There are existing players who would like their license be converted to digital bank. And there are also foreign players that have signified interest to enter the Philippine market. We have already received some queries about certain legal requirements, regulatory requirements,” said Plabasan.
“We will start accepting by January 1. And by January 1, probably we have done also some assessment of the existing players there,” he said.
Plabasan said the chartering is expected to be completed within three to four months.
At present, six digital banks are operating in the country.
These include GoTyme Bank, Maya Bank, Overseas Filipino Bank, UnionDigital Bank, UNObank and Tonik Digital Bank.
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Digital banks in the Philippines
The BSP said it is actively looking for more digital banks to operate in the Philippines.
In August 2023, the BSP Monetary Board lifted the moratorium on new digital banking licenses, allowing a maximum of 10 digital banks to operate in the country.
This means that starting January 1, 2025, the BSP will be accepting applications from new players or existing banks seeking to convert their licenses to digital bank licenses.
The BSP earlier said its decision to allow more digital banks is driven by several factors:
Promoting financial inclusion: Digital banks have the potential to reach underserved and unbanked populations, especially in rural areas.
Enhancing financial stability: The BSP believes that a diverse and competitive digital banking sector can contribute to a more stable financial system.
Driving innovation: Digital banks are at the forefront of technological advancements, offering innovative products and services that can benefit consumers and businesses.
By welcoming more digital banks, the Philippine central bank said it is aiming to accelerate the country’s digital transformation and improve financial access for all Filipinos.
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