The Central Bank of the Philippines (Bangko Sentral ng Pilipinas, or the BSP) announced that it would lift the moratorium on new digital banking licences.
The 8 August decision by the BSP Monetary Board will allow up to four additional digital banking licences to be issued, expanding the sector’s reach in the Philippines.
Digital banking is expected to improve the Philippines’ financial system while ensuring risk management. Since the introduction of digital banking in December 2020, six digital banks have started operations in the country. The upcoming relaxation of the moratorium will allow for either the creation of new or conversion of existing banking licences to digital formats.
BSP Governor Eli Remolona Jr. explained that the restriction on new licences was meant to give the BSP the opportunity to closely monitor industry developments.
This approach will give us a broader perspective as these banks continue to evolve and allow us to assess the impact of new entrants on the banking system.
The application process for new licences will be based on the value proposition, business models, and resource capabilities of applicants. Prospective Digital Banks must meet several standard licensing requirements, including transparency of ownership, shareholder suitability, suitability of directors and senior management, sufficient capital, and robust corporate governance and risk management frameworks.
The BSP will only grant licences to applicants that offer unique value propositions or innovative business models.
We are looking for applicants who bring new and distinct offerings to the market, with significant potential to reach underserved or untapped market segments.
Previously, the BSP limited the number of digital bank licences to six and temporarily paused the application process on 31 August 2021. The pause was introduced to assess the effectiveness and impact of existing digital banks and their contribution to the BSP’s digital transformation and financial inclusion goals.
