BSP allows up to 10 Philippine digital bank licensees

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has approved to grant four additional licenses for digital banks for a maximum of 10 to operate in the country, as it approved the lifting of the moratorium.

The central bank, which previously limited digital bank license grants to six, said the grant of new licenses aims to continuously harness the potential of such banks in bringing positive impact to the Philippine financial system.

“With this limit, the BSP can closely monitor developments in the digital banking industry, obtain broader perspective as these banks mature further in their operations, as well as assess the impact of the entry of new players on the banking system,” BSP governor Eli Remolona Jr. said in an emailed statement.

The new digital bank licenses include the conversion of an existing bank’s license to a digital bank license. Digital banks are defined as banks that offer financial products and services that are processed end-to-end through a digital platform and/or electronic channels with no physical branches.

To qualify, banks must meet the minimum capitalization of P1 billion, and will have to follow all the fiduciary rules imposed on other bank categories.

The six banks that have already secured the digital bank license are GOTyme, Maya Bank, Overseas Filipino Bank (OFBank), Tonik Bank of Singapore, UNObank of Singapore, and UnionDigital of the Union Bank of the Philippines.

According to the BSP, applicants will be subjected to a “rigorous licensing process” that will focus on their value proposition, business models, and resources capabilities.

They should also comply with the standard licensing criteria which covers the assessment of the transparency of ownership and control structure, suitability of shareholders, fitness and propriety of directors and senior management, adequacy of capital, among others.

“Applicants must bring something new to the table. We want to see unique product and service offerings that are different from that offered by the existing market players. These offerings should have significant potential to reach broader clientele, particularly the untapped or underserved market segments,” Remolona said.

“We have based our decision from our assessment of the operations of digital banks,” he added. --VAL, GMA Integrated News