BSP could consider granting more than four new digital banking licenses

THE BANGKO SENTRAL ng Pilipinas (BSP) could consider granting more than four new digital banking licenses if enough applicants are able to comply with the stricter criteria, an official said.

BSP Deputy Governor Chuchi G. Fonacier said on Monday that “there is a possibility” of granting more than four licenses for digital lenders, subject to the approval of the Monetary Board.

“It depends, we will see. Does it have a good value proposition? It will be up to the Monetary Board (if it will) go beyond the four,” she told reporters.

The central bank will lift the moratorium on the grant of new digital banking licenses on Jan. 1, 2025.

The BSP earlier said it will allow four more digital banks to operate in the country, which would bring the maximum number to 10. These can either be new applicants or banks that seek to convert their existing license to a digital one.

In 2021, the BSP capped the number of digital banking licenses at six as it sought to boost regulatory capacity and supervision of the sector.

Ms. Fonacier said they will be issuing a circular on the new digital bank application within the month.

“But even before the application period starts, we’re already entertaining questions, proposals. Of course, the proponents would already plan. We have already started engaging them,” she said.

The BSP is also monitoring lenders already behaving like digital banks and will push them to obtain digital bank licenses, Ms. Fonacier said.

“We’ll see once the applications start coming in and our assessment of the existing ones doing digital bank-like operations,” she added.

If there is a need to exceed the four available slots, especially among those banks already operating like digital lenders, Ms. Fonacier said they will seek the Monetary Board’s approval to increase the number of licenses.

However, she also noted that there is still a chance that the BSP will not grant all four slots if the applicants do not meet the criteria.

The central bank earlier said applicants must “bring something new to the table” and offer innovative products to better reach underserved and untapped markets.

Applicants will also undergo a rigorous licensing process that will evaluate their value proposition, business models and resource capabilities.

They must also be compliant with the standard licensing criteria, which cover capital adequacy and corporate governance and risk management, among others.

Ms. Fonacier said there has been “a lot” of interest from new players from here and abroad, citing a European digital bank with a “good track record.”

If the applicants are able to meet the requirements, these banks should be able to secure their licenses within the next year.

After the applicant complies with the BSP’s requirements, they are then required to register with the Securities of Exchange and Commission, she added.

There are currently six online lenders in the Philippines, namely, Tonik Digital Bank, Inc.; GoTyme Bank of the Gokongwei group and Singapore-based Tyme; Maya Bank of Voyager Innovations, Inc.; Overseas Filipino Bank, a subsidiary of Land Bank of the Philippines; UNObank of DigibankASIA Pte. Ltd.; and UnionDigital Bank of Union Bank of the Philippines, Inc.

The BSP defines a digital bank as a lender that offers financial products and services that are processed end-to-end through a digital platform or electronic channels with no physical branch. — Luisa Maria Jacinta C. Jocson