BSP to Require Digital Banking License for Banks Acting Like One
The Bangko Sentral ng Pilipinas (BSP) will reopen digital banking license applications in 2025, emphasizing that institutions operating like digital banks must secure proper licenses and meet stricter standards; to potentially expand the current four-slot limit.
What’s the significance: Digital bank leaders must focus on compliance and innovation to stay competitive while preparing for opportunities to expand under stricter BSP standards.
- Also, 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 starting January 1, 2025.
- Initially set for four slots, 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 securing licenses, with inquiries already underway.
- This was first shared in August by BSP Governor Eli Remolona.
- Financial institutions currently operating like digital banks under other licenses will need to transition to a digital banking license to comply with BSP regulations.
- Approved applicants could begin operations within 2025, with a 3-4 month chartering process.
Key quote:
“If you’re already behaving like a digital bank, you should be regulated like a digital bank, not a rural bank. That’s why the intention really is to minimize the arbitrage.”
Melchor Plabasan, BSP director, Technology Risk and Innovation Supervision Department, via PhilStar
Plabasan added that the central bank is currently determining which among digital financial institutions should be considered as operating like 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 chartering process in 3-4 months, potentially launching operations in 2025.
- Emphasis: The BSP said it will only grant licenses to applicants that meet the 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 are now operational since August 2022 after they all acquired certificates of authority (COA), the third and final step in enabling these financial institutions to begin full operations.
The banks are:
- Maya Bank
- Overseas Filipino Bank
- Tonik Digital Bank
- UNO Digital Bank
- UnionDigital Bank
- GoTyme Bank
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%), they come with higher risk, whereas digital banks provide lower but safer interest rates (0.05%–14%).
This article is published on BitPinas: BSP to Require Digital Banking License for Banks Acting Like One
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