Philippine digital lenders attract over $700 million in investments

THE PHILIPPINE digital banking sector has received more than $700 million from local and foreign investors, resulting in a significant growth in depositors, an industry group said.

“Global and local investors have poured over $700 million into the digital banking sector, setting a new milestone that underscores the industry’s robust growth and its potential to reshape the digital financial landscape,” the Digital Bank Association of the Philippines (DiBA PH) said in a statement on Tuesday.

“In a sign of investor confidence, digital banks have attracted substantial capital since 2021 and are now showcasing extraordinary growth, with depositor numbers reaching 5.9 million at the end of 2023 alone,” it added.

Total deposits in the sector reached P69 billion last year from P35 billion in 2022.

Gross loans rose to P25 billion from P11 billion a year prior.

“The significant and continued investment in the digital banking industry sector is a strong vote of confidence in its ability to stimulate economic growth, create jobs, and broaden access to savings and credit,” DiBA PH and Maya Bank President Angelo S. Madrid said.

He added that digital banks will need to focus on strategic investments and capital to reach profitability and boost financial inclusion.

“The global digital banking industry norm shows a five- to seven-year trajectory to break even,” DiBA PH said.

The Bangko Sentral ng Pilipinas (BSP) earlier said only two out of the six licensed digital lenders posted a net profit in 2023.

The digital banking sector posted a combined net loss of P4.38 billion in 2023, BSP data showed, with total assets at P88.69 billion.

As of end-February, the industry’s assets stood at P91.55 billion.

“We see this (investment) as more than a financial endorsement from the global and local investment communities; it’s a recognition of the sector’s potential to drive economic inclusivity and innovation, setting a new standard for the future of banking in the Philippines,” DiBA PH Trustee and UnionDigital Bank President and Chief Executive Officer Henry R. Aguda said.

DiBA PH said digital banks can help fill the gaps in the national financial structure as the sector can facilitate access to deposit accounts and credit despite ongoing challenges such as the slow rollout of the national ID system and limited coverage of the national credit bureau.

“All our members have credible investors who are committed to growing the Philippine market in the long run. We all look forward to growing the industry as we stabilize the sector and scale up our various initiatives, including credit,” DiBA PH Trustee and GoTyme Bank President and Chief Executive Officer Nathaniel D. Clarke said.

The central bank has capped the number of digital banks in the country at six since 2021 as it wants to foster competition and monitor developments in the sector.

The six online lenders currently operating in the Philippines are GoTyme Bank, Maya Bank, Overseas Filipino Bank, Tonik Digital Bank, UnionDigital Bank, and UNO Digital Bank. These banks in 2022 formed DiBA PH to boost financial inclusion.

BSP Governor Eli M. Remolona, Jr. last year said they could lift the moratorium on the grant of new licenses “pretty soon” as more entities have expressed interest in entering the market. —