Bangko Sentral ng Pilipinas (BSP) will reopen applications for digital banking licenses in 2025, emphasizing that institutions operating as digital banks must obtain proper licenses and meet stricter standards; to potentially expand the current limit of four spaces.
What is the meaning: Digital bank leaders must focus on compliance and innovation to remain competitive while preparing for expansion opportunities under stricter BSP standards.
- Additionally, the reopening of digital banking license applications could further improve the country’s digital financial systems and financial inclusion.
Key details:
- The central bank stated that it will accept applications for digital banking licenses from January 1, 2025.
- Initially set for four places, the BSP noted that it may increase this limit if applicants meet stricter requirements.
- According to the central bank, both local and foreign entities have expressed interest in obtaining licenses and investigations are already underway.
- This was first shared in August by BSP Governor Eli Remolona.
- Financial institutions currently operating as digital banks under other licenses will need to make the transition to a digital banking license to comply with BSP regulations.
- Approved applicants could begin operating within 2025, with a charter process of 3 to 4 months.
Key quote:
“If you are already behaving like a digital bank, you should be regulated as a digital bank, not as a rural bank. That’s why the intention really is to minimize arbitration.”
Melchor Plabasan, director of the BSP, Department of Technological Risk Supervision and Innovation, via PhilStar
exit He added that the central bank is currently determining which of the digital financial institutions should be considered to operate as a digital bank.
Requirements: Applicants must have a minimum capital of ₱1 billion and present innovative solutions to qualify for a digital banking license.
- Approved applicants could complete the incorporation process in 3 to 4 months and potentially begin operations in 2025.
- Emphasis: The BSP said it will only grant licenses to applicants who meet strict criteria, not just to fill available slots.
What are digital banks: In November 2020, the BSP designated digital banks as a separate category, providing financial services exclusively through digital platforms without physical branches.
Current PH digital banks: There are currently six digital banks that have been operational since August 2022 after they all acquired certificates of authority (COAs), the third and final step to allow these financial institutions to begin full operations.
The banks are:
- Mayan Bank
- Philippine Overseas Bank
- Tonik Digital Bank
- UNO Digital Bank
- Banco Unión Digital
- GoTyme Bench
What’s next? BSP targets a total of 10 digital banks operating in the Philippines under the Digital Banking Framework.
worth reading: In this BitPinas article, the interest rates offered by local crypto exchanges (PDAX and Coins.ph) and digital banks in the Philippines are compared, highlighting that while crypto exchanges offer higher yields (8%- 10%), come with higher risk, while digital banks offer lower but safer interest rates (0.05%-14%).
This article is published on BitPinas: BSP will require digital banking license for banks that act as such
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