Philippines will only have 6 digital banks for now

MANILA, Philippines — The Bangko Sentral ng Pilipinas will not be filling the last digital banking seat after applicants competing for the remaining slot failed to submit complete documents.

This leaves the Philippines with six digital banks — from the original plan of allowing seven players — during a three-year moratorium on new applications meant to assess the impact of the nascent industry on the local financial system, BSP Governor Benjamin Diokno said on Monday.

The central bank has awarded digital banking licenses to Overseas Filipino Bank, Tonik Digital Bank, UNObank, Union Digital Bank, GOtyme and Maya Bank.

“To be accurate, we approved six digital banks and it will remain six because the seventh slot, which was supposed to be competed among the nine additional applicants, it turned out the nine additional applicants failed to complete documentation,” Diokno said during a virtual forum hosted by the Financial Executives Institute of the Philippines.

“We kept it at six so we’ll be able to monitor and ensure there’s healthy competition,” he added.

The BSP stopped entertaining new applications on September 1, a deadline which applied to both new digital banks and incumbent lenders that plan to convert their existing licenses to a digital bank license.

It was just last December when the central bank issued a circular creating a new bank category for virtual lenders. The BSP requires digital banks to have a minimum capitalization of P1 billion.

Diokno is hoping that digital banks can assist the BSP in achieving its goal of shifting 50% of total retail transactions in the Philippines to digital channels and raise the number of Filipino adults with bank accounts to 70% by 2023.