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MANILA – The central bank of the Philippines said Thursday it will allow the establishment of online-only banks in a move aimed at further expanding digital financial services, which have exploded in Southeast Asia amid the pandemic.
Bangko Sentral ng Pilipinas, or BSP, created a new license category for “digital banks”, defined as those offering “financial products and services that are processed end-to-end through a digital platform and / or electronic channels without branches. physical “. . “
The removal of the requirements for physical branches is expected to open up the banking sector to new players.
According to the draft of the rules, digital banks must have a minimum capitalization of one billion pesos ($ 20 million). They will be able to offer traditional banking services as well as more innovative services subject to regulatory approval. However, they will not be allowed to establish physical branches and must maintain a central office in the Philippines.
BSP Governor Benjamin Diokno said that the introduction of a digital banking framework will help promote financial inclusion in the country where only about 30% of the population has bank accounts.
“We see these banks as additional partners to further promote market efficiency and expand Filipinos’ access to a wide range of financial services, moving us closer to realizing our goal of at least 50% of total transactions Retail payment systems have moved digital, and 70% of adult Filipinos have transaction accounts by 2023, “Diokno said. “This is seen as removing the hard spots and exceeding our financial inclusion agenda.”
Applications for the new licenses are now being accepted, Diokno told Nikkei Asia.
Regulators can choose to limit the number of digital banks that are established, depending on the number of applications and the condition of the banking sector in the country.
“Basically, the BSP seeks to attract players with a strong value proposition, sufficient financial strength, technical management expertise and effective risk management,” Diokno said.
The Philippines move comes as Southeast Asian countries are embracing online-only banking.
Singapore’s central bank is expected to license non-banks by the end of the year. The bidding for the licenses caught the attention of both Singaporean and foreign startups, including local players Grab and Sea, as well as Chinese fintech technology Ant Group.
In Vietnam, the country’s first digital bank was relaunched in September to take advantage of COVID-driven demand for cashless transactions.
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