Diokno willing to grant more digital bank licenses

THE central bank is willing to allow more digital banks to operate in the country, if it sees strong demand, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.

“Our policy is to consider among the applicants the top five banks that we are willing to consider, and depending on our experience, we may expand the number of digital banks. We can have more if there’s a huge demand for it,” Mr. Diokno said in a webinar hosted by the Asian Development Bank Institute on Wednesday.

Under the framework approved by the Monetary Board, the number of digital bank licenses is currently capped at five.

Earlier this month, the BSP approved the digital bank license of the Overseas Filipino Bank, a subsidiary of the state-owned Land Bank of the Philippines.

“(OF Bank) will be very helpful for our over 10 million overseas Filipino workers,” he said, noting they are also assessing other applications for digital bank licenses.

BSP Deputy Governor Chuchi G. Fonacier told BusinessWorld last week that they have already received three formal applications for a digital banking license — all of which are partnerships between foreign and local entities.

Financial technology player Squidpay Technology, Inc. also said last week it is looking to acquire a 60% stake in Batangas-based Phil Star Development Bank and then seek a digital banking license.

In November last year, the central bank released the framework for digital banks, formally differentiating its license type from brick-and-mortar banks such as commercial, thrift, rural, and Islamic banks.

Digital banks are expected to offer products and services mostly through online platforms. These banks are required to have a minimum capital of P1 billion.

Some local and foreign lenders currently have all-online retail banking services through an app, such as CIMB Bank Philippines, Inc., ING Bank N.V. Manila, Tonik Digital Bank, Inc. (Philippines), East West Banking Corp.’s Komo and Rizal Commercial Banking Corp.’s Diskartech.

Mr. Diokno is hopeful that the rise of digital banks, together with other IT-related reforms could help them reach their goal to bring in more Filipinos into the formal financial system.

“We want to minimize the digital divide because we really want to make it [banking services] available to the lowliest families,” he said.

Executive Order 127 signed by President Rodrigo R. Duterte in March, allowing internet and value-added service providers access to satellite systems to build broadband facilities even without a congressional franchise. For its implementing rules and regulations, the central bank wants the government to allow banks to operate satellite broadband to help boost their operations and give their clients better access to financial services.

As of 2019, the country’s banked population stood at 29% of Filipino adults. The BSP wants to bring this to 70% by 2023. — Luz Wendy T. Noble