BSP wants quality digital banking
The central bank wants digital bank players that will be “tenacious” or strong enough to withstand risks such as fraud and cyberattacks, and that these online-only banks will last a long time.
“We will put emphasis on the quality over quantity of players in expanding the digital nancial ecosystem,” said Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.
“Essentially, we're looking to attract players with strong value proposition, sufficient nancial strength, management expertise and excellent risk management which could be our ‘tenacious’ partners in achieving the shared goal of onboarding more Filipinos in the nancial system,” said Diokno.
The BSP this month circulated the second draft circular for the establishment of digital banks in the country. These banks, which are proposed to have a minimum R1-billion capitalization, are expected to contribute to the “greater efficiency in the delivery of
nancial products and services and in expanding reach into the unserved and underserved market segments.”
Diokno said they want digital banks that have cyber resilience and will advance the nancial sector’s digitalization.
Part of the proposed circular is to allow existing banks with traditional brick and mortar branches to convert to digital banks. With conversion and new entrants that include non-banks, the BSP will set a limit on the number of approved digital banks.
Diokno said the BSP “reserves the right to set a limit on the number of digital banks’ entrance considering the number of applications received.”
“The numerical limit will depend primarily on the number of digital banking applications that we will receive and our assessment of the overall banking situation,” he added.
Diokno said the BSP currently are conducting exploratory talks with “quite a number of parties such as local banks and non-bank corporations, as well as foreign individuals and non-bank corporations that have signi ed interests on the establishment of digital banks.”
Giving out a new classi cation of banking license as digital banks is part of the BSP’s three-year digital payments transformation roadmap which it launched last week. The roadmap aims to lay down a digital nancial ecosystem that is supportive of nancial inclusion, said Diokno. The BSP is targeting to have 50 percent of retail payment transactions to shift to digital and 70 percent of adult Filipinos to have formal accounts by 2023.
In a statement over the weekend, the BSP said the Financial Inclusion Steering Committee which now includes the Philippine Commission on Women, during its 9th meeting last week agreed to promote digital payments as “an imperative for nancial inclusion in the new economy, and to collectively shepherd statutory issuances that can liberalize the use of satellite technology and services to address the challenges in internet connectivity.”
The BSP said FISC also talked about other initiatives such as harmonization of government efforts to digitize collections and disbursements, payment of private sector wages through transaction accounts, and digitization of the distribution of bene ts under the Social Amelioration Program.