BSP Allows Up to 10 Digital Bank Licenses in the Philippines

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The Bangko Sentral ng Pilipinas (BSP) Monetary Board has approved the grant of four additional licenses for digital banks, allowing a maximum of 10 to operate in the country. This decision comes with the lifting of the moratorium on issuing new digital bank licenses.


The central bank, which previously limited digital bank license grants to six, stated that the expansion aims to harness the potential of such banks in bringing a positive impact to the Philippine financial system. BSP Governor Eli Remolona Jr. emphasized that this limit will enable the BSP to closely monitor developments in the digital banking industry, obtain a broader perspective as these banks mature in their operations, and assess the impact of new players on the banking system.


The new digital bank licenses include the conversion of an existing bank's license to a digital bank license. Digital banks are defined as those that offer financial products and services 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 follow all the fiduciary rules imposed on other bank categories. The six banks that have already secured digital bank licenses 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 undergo a "rigorous licensing process" that focuses on their value proposition, business models, and resource capabilities. They must also comply with the standard licensing criteria, which covers the assessment of ownership and control structure transparency, suitability of shareholders, fitness and propriety of directors and senior management, and adequacy of capital, among others.


Remolona emphasized that applicants must bring something new to the table, with unique product and service offerings that differ from those offered by existing market players. These offerings should have significant potential to reach broader clientele, particularly the untapped or underserved market segments.


The BSP's decision to expand digital bank licenses reflects its commitment to fostering innovation and financial inclusion in the country's banking sector. By allowing up to 10 digital banks to operate, the central bank aims to drive competition, improve customer experience, and increase access to financial services for Filipinos.

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