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THE Bangko Sentral ng Pilipinas (BSP) announced Thursday that it has approved the Philippines’ digital banking framework.
The framework aims to recognize digital banks as a new banking category separate and distinct from existing bank classifications.
Digital banking is defined as a bank that offers financial products and services that are processed end-to-end through a digital platform and / or electronic channels without physical branches.
“Digital banks will play an important role in the digital financial ecosystem. We see these banks as additional partners to further promote market efficiency and expand Filipinos’ access to a wide range of financial services, moving closer to realizing our goal of at least 50 percent of total transactions of retail payment have moved to digital technology, and 70 percent of adult Filipinos have transaction accounts by the year 2023, ”said BSP Governor Benjamin Diokno in a statement.
Under the new framework, digital banking applicants are expected to have strong digital governance, a strong, secure and resilient technology infrastructure, and an effective data management strategy and practices.
“The BSP recognizes that digital banks are exposed to the same financial risks that conventional banks face with potentially high exposure to cybersecurity and money laundering risks. As such, digital banks would be subject to the same prudential requirements that apply to other types of banks with a recalibration in accordance with their business model and risk profile, ”the BSP said in a statement.
BSP data shows that during the pandemic, some 4.6 million in basic deposit accounts were opened, with an aggregate value of deposits of P4 billion.
Diokno said they expect more transaction accounts to open as more online providers, as well as the government, are becoming increasingly digital as a result of restrictions on movement and travel.
“Our long-term goal is to see more digitally savvy Pinoys, so it becomes second nature for them to conduct routine financial transactions online: make payments and fund transfers, or make use of credit, insurance and investments. Diokno said. in a separate talk.
Other provisions of the framework include the authorization of digital banks to use qualified cash agents and other service providers subject to existing regulations to complement the innovative provision of financial services.
They are also expected to maintain a primary place of business in the Philippines to house the administration offices and other support operations and serve as the primary hub for handling customer concerns and the point of contact for stakeholders, including the BSP. and other regulators.
In light of this, the BSP said that they can limit the number of digital banks that can be established considering the total number of requests received and the assessment of the overall banking situation.
“Basically, the BSP seeks to attract players with a strong value proposition, sufficient financial strength, technical management expertise and effective risk management,” Governor Diokno said.
