Starting from January 2025, the country’s central bank, the BSP, is ushering in a new era for the banking sector with the granting of licenses for new digital banks. This bold initiative is part of a desire to modernize the financial landscape and encourage innovation in fintech. In response to the rapid evolution of consumer expectations and the explosion of digital technologies, this measure aims not only to promote competition but also to provide more accessible, convenient, and secure financial services. The future of banking transactions is at our doorstep, and it promises to be as exciting as it is enriching for each of us!
Opportunities for Digital Banks
The Bangko Sentral ng Pilipinas (BSP) has announced that it will lift the moratorium on granting new digital bank licenses starting January 1, 2025. Consequently, up to ten digital banks will now be able to operate in the country. This decision aims to leverage the benefits of digital banking services while mitigating potential risks.
Rigorous Licensing Process
The new policy will allow for the issuance of four additional licenses for digital banks. These will be available to both new applicants and existing banks wishing to convert. The license granting process will be rigorous, thoroughly evaluating business models, resource capabilities, and compliance with established criteria such as ownership transparency, management competence, capital sufficiency, and well-defined strategic plans.
Priority for Innovative Models
The BSP will prioritize candidates presenting unique value propositions or innovative business models currently absent from the market. According to Governor Eli M. Remolona, Jr., this decision is inspired by the financial stability of existing digital banks and their contribution to promoting digital financial services and financial inclusion within the country.
The Importance of Providing Distinct Services
Governor Remolona emphasized that by limiting the number of licenses, the BSP could more effectively monitor developments in the digital banking sector. It is crucial for new candidates to offer distinct products and services, particularly to serve underserved market segments.
International Comparison
It is interesting to note that, unlike the Philippines, the Hong Kong Monetary Authority (HKMA) recently completed a comprehensive review of its digital banking sector and decided not to issue additional licenses.
By the Numbers
| Criteria | Details |
| Total number of licenses to be granted | 10 |
| Date for reopening applications | January 1, 2025 |
| Current digital banks | 6 |
