THE CENTRAL BANK wants to review Overseas Filipino Bank’s (OFBank) business model first and then issue new regulations if needed as the lender seeks to go digital, a senior official said.

Land Bank of the Philippines (LANDBANK) President and CEO Cecilia C. Borromeo earlier said the lender is “in close coordination” with the central bank as it seeks to transform its subsidiary OFBank into a “branchless digital bank” expected to be launched in June next year.

She said this could be the first domestic digital bank, hence the need to coordinate with the BSP for regulations.

Referring to it as the “Beta Bank,” Ms. Borromeo said OFBank will offer other financial services such as insurance and digital payments aside from lending, which will be tailored according to overseas Filipino workers’ (OFW) needs.

BSP Deputy Governor Chuchi G. Fonacier said the central bank’s existing regulations can already cover digital banks.

“The proponent digital bank should present to the BSP its business model. So, depending on the business model, that’s how the BSP would evaluate taking into account existing regulations,” Ms. Fonacier said in a text message.

The official said discussions between the BSP and OFBank are still ongoing.

“The OFBank as a digital bank will be a good addition to the country’s digital banking. It will be able to contribute to the shift to more digital banking services,” Ms. Fonacier added.

Finance Secretary Carlos G. Dominguez III earlier said OFBank will have around 10 million OFWs as potential customers, and going digital will make it easier for the lender to reach its clients.

“It just makes sense to do that because the potential customers of the OFBank, overseas Filipinos lang, more than 10 million na yan (overseas Filipinos alone, that’s already more than 10 million). Now if you’re going to go to the traditional way of doing banking, of setting up a branch, getting permission from the different countries to set up a branch, it’s going to take you forever. It’s better to spend time on doing it digitally. That’s easier to reach all your potential customers,” Mr. Dominguez said.

Ms. Borromeo said OFBank’s move to digital banking will not entail a huge investment as LANDBANK’s digital platform can handle the shift.

“Actually, [the budget allotment] won’t be much because the IT platforms of LANDBANK is very robust… It can handle that, we just need to tweak it,” she said.

OFBank was launched in January last year — four months after the transfer of Philippine Postal Bank shares to LANDBANK from the Philippine Postal Corporation and the Bureau of the Treasury — through Executive Order No. 44 to provide financial products and services tailored to the requirement of overseas Filipinos such as efficient foreign remittance services, with its main headquarters at the Liwasang Bonifacio in Manila.

The bank also has a representative office at the Philippine consular office in Dubai where Filipinos abroad can inquire about OFB’s banking services including peso automated teller machine savings, time deposits, and checking accounts, loan products, investment products such as unit investment trust funds, payment services, and remittance services.

Mr. Dominguez said in March 2018 that the Finance department wants OFBank to go fully digital, with plans to put up mobile payment technology system for overseas Filipinos who regularly remit money to the Philippines via the bank.

In June last year, the Finance department said it has sought technical support from the World Bank Group on setting up a digital banking system for OFBank, as it seeks to privatize half of the lender in the future. — B.M. Laforga

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