Digital banks test Philippine market

The Bangko Sentral ng Pilipinas (BSP) has approved the applications of  Tonik Digital Bank and UNObank   to operate as digital banks in the country, bringing to three the number of participants in the new bank classification.

Tonik Digital Bank, a unit of Singapore-based Tonik Financial headed by founder and chief executive officer Greg Krasnov, was granted a license to operate as a rural bank in the Philippines in December 2019.

Tonik offers its financial products and services 100 percent online, unlike traditional and digital banks that require maintaining a few physical branches. It offers accessible, flexible, and inclusive financial services, including industry-leading deposit interest rates of up to six percent per annum, and unique saving features.

It has secured over P1 billion in retail deposits just a few months after it launched a mobile platform offering game-changing deposit interest rates of up to six percent per annum for time deposits.

On the other hand, UNObank – operated by Singapore’s DigibankAsia – is working with cloud banking provider Mambu and Amazon Web Services for its rollout in the Philippines.

Uno banking platform Cognito weaves in AI (artificial intelligence) at its very core with innovative ways to apply advanced machine vision and learning models on customer onboarding, transaction authorizations, alternate data based credit scoring, product and interface personalization at an individual level to advanced security, risk and privacy management patterns

Last April, the   Monetary Board approved the digital bank license of the Overseas Filipino (OF) Bank, a subsidiary of the state-run Land Bank of the Philippines.

The regulator issued Circular   1105 in December last year, recognizing digital bank as a new bank category that is separate and distinct from the existing bank classifications. It is defined as a bank that offers financial products and services that are processed end-to-end through a digital platform and electronic channels with no physical branches offering financial products and services.

The guidelines pegged the minimum capitalization of digital banks at P1 billion. Under the framework approved by the Monetary Board, the number of digital bank licenses is initially capped at five.

The BSP embarked on a Digital Payments Transformation Roadmap to convert 50 percent of total retail transactions in the country to electronic channels and to raise the number of Filipinos owning financial accounts to 70 percent by 2023.

With the shift in consumer behavior due to the COVID-19 pandemic, Diokno is confident the goals would be achieved “before the end of 2022.”

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