Group: $700M+ invested in digital banking sector
LOCAL digital banks received $700 million worth of investments from investors as the financial institutions continued to grow the number of their depositors, according to the Digital Bank Association of the Philippines (DIBA PH).
According to DIBA PH, the digital banking sector now has 5.9 million depositors as of the end of last year. Total deposits reached P69 billion at the end of 2023, nearly double the P35 billion it recorded in 2022.
The DIBA PH also said through a statement last April 6 that the total gross loan portfolio of digital banks more than doubled to P25 billion in 2023 from P11 billion in 2022.
According to the organization, these milestones position digital banks as leaders in delivering meaningful, tech-empowered, and personalized financial services, particularly to communities historically underserved by conventional banking entities.
“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 President Angelo S. Madrid was quoted in a statement as saying.
Madrid, also president of Maya Bank Inc., added that as digital banks navigate the path to profitability while accelerating financial inclusion, strategic investments and capital play a crucial role.
Based on the experience of the global digital banking industry, it takes five to seven years for these financial institutions to break even.
“We see this 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 Henry Rhoel R. Aguda was quoted in the statement as saying.
According to the DIBA PH, digital banks have been able to address key gaps in the national financial infrastructure and overcome challenges such as the slow rollout of the national ID system and limited coverage of the national credit bureau.
Despite these obstacles, the digital-first innovative approach of these banks have significantly increased access to deposit accounts and credit.
In 2021, the Bangko Sentral ng Pilipinas created a new digital banking category to bolster financial services in the country and capped the entrants to six banks. In an unprecedented timeframe for the banking industry, the digital banks established their operations and were all “live” by 2023.