UnionBank becomes the fourth bank with a digital banking license in the Philippines as Bangko Sentral ng Pilipinas (BSP) granted the Aboitiz-led company the license to establish its own digital bank. UnionBank joins Tonik Digital Bank, UNObank and Overseas Filipino (OF) Bank of Land Bank of the Philippines as four banks with a digital banking license in the country.
UnionBank will create a new subsidiary which will be called Union Digital Bank (UnionDigital) according to a recent filing.
In an email to BusinessWorld, UnionBank said the new subsidiary UnionDigital will support all facets of life for unbanked and underbanked segments. The digital bank’s focus is to set itself apart from other digital banks by leveraging UnionBank’s team and leadership years of experience from the industry through banking innovation, collaboration and digital transformation.
The Philippine National Bank, Paymaya and Rizal Commercial Banking Group are also applying for a digital banking license. The BSP said it is expecting more companies to apply.
The BSP introduced the application for the new digital banking license last December when it issued a circular creating a new bank category for virtual lenders. This requires applicants to have a minimum capitalization of P1 billion.
The BSP is expecting the new sets of companies that have been given a digital banking license to help the central banks bring 70 percent of Filipino adults into the banked population and have 50 percent payments done online by 2023.
What is a Digital Bank?
As per the country’s central bank, digital banks are institutions that offer financial products and services which are processed end-to-end through a digital platform and/or electronic payment channels with no physical branch/sub branch or branch-light unit offering such products and services.
BSP capped the digital banking to only five (5) players so regulators can easily assess their financial performance and their impact compared to traditional financial systems. However, BSP Governor Benjamin Diokno states that the limitation may be lifted depending on the results of the BSP assessment.
This article is published on BitPinas.com: UnionBank Receives Digital Banking License, Will Create UnionDigital