BSP to issue new digital bank licences starting January 2025

In essence, this decision will allow up to ten digital banks to operate within the country, and the decision is intended to leverage the advantages of digital banking while also mitigating potential risks. Since the launch of the Digital Banking Framework in December 2020, six digital banks have been licenced in the Philippines, namely Tonik, Maya Bank, Overseas Filipino Bank (OFBank), UNObank, UnionDigital Bank, and GoTyme Bank.

Licencing process and criteria

The new policy will open up four additional digital bank licences, which will be available to both new applicants and existing banks that are interested in converting. However, the licencing process will be rigorous, focusing on the evaluation of business models, resource capabilities, and adherence to established criteria. These criteria include transparency in ownership, suitability of shareholders, management competency, capital adequacy, and well-defined strategic plans. 

It's worth noting that the BSP will give priority to applicants who present unique value propositions or innovative business models that are currently not offered in the market. BSP Governor Eli M. Remolona, Jr. noted that the decision to reopen applications was influenced by the financial stability of the current digital banks and their contribution to promoting digital financial services and financial inclusion in the country. 

Previously, the BSP had capped the number of digital bank licenses at six and suspended new applications in August 2021. This pause was intended to allow the BSP to evaluate the performance of the existing digital banks and their impact on digital transformation and financial inclusion goals. 

Governor Remolona highlighted that by limiting the number of licences, the BSP could more effectively monitor developments within the digital banking sector, gain insights as these institutions mature, and assess the potential impact of new entrants on the broader banking system. He also stressed the importance of new applicants offering distinct products and services, particularly those that could serve untapped or underserved market segments. 

In contrast, the Hong Kong Monetary Authority (HKMA) recently concluded a comprehensive review of its digital banking sector and decided not to issue any additional digital bank licences.