Manila Bulletin

BSP wants qual­ity dig­i­tal bank­ing

- By LEE C. CHIPONGIAN

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.

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