A LENDER is looking to join the virtual banking race in the Philippines, according to Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier.

“There’s one right now na (that is) currently engaging the BSP but I cannot disclose the name,” Ms. Fonacier told BusinessWorld in an interview on the sidelines of the Asian Bankers Association Conference on Friday when asked about the development.

She added that the lender is also looking to offer retail banking, just like the two virtual banks currently operating in the country, CIMB Bank and ING Bank N.V.

Meanwhile, BSP Managing Director for the Financial Technology Subsector Vicente T. de Villa III said that the central bank is reviewing rules on online banking.

“It’s in the open banking space. Right now, we are reviewing our regulations. Maybe too early at this point but it is something we’re definitely exploring. Cause in this day and age, digital banking…innovations are moving forward,” he told reporters on the sidelines of the Financial Inclusion Forum for the Labor Sector held at the BSP on Monday.

He also explained the difference between e-money issuers and virtual banks.

“[With] a banking license, you are able to take funds from the public and use it for lending, which are two different things. On their [e-money issuers] own end, they are using their own funds to be able to expand and provide credit…,” he said.

The Philippines officially welcomed two virtual banking players with the formal launch of Malaysian financial giant CIMB Bank and Dutch lender ING in 2019.

The two internet-only banks have been trying to lure users through promotional interest rates of up to 4% per annum for those who will be depositing until a certain period.

Asked about these banks’ competitive rates, Ms. Fonacier said: “Maybe the reason for that is mas (because it’s more) efficient kasi so less cost because technology, unlike how the traditional banking is brick and mortar.”

Aside from the Philippines, CIMB’s mobile banking app is also operational in Vietnam. Meanwhile, ING’s presence in the country was more focused on wholesale banking before going into retail through their all-digital platform.

Both banks let customers register a savings account with no minimum amount and maintaining balance through their mobile phones. An electronic know-your-customer process is then carried out as clients need to scan their valid government IDs for verification purposes.

Virtual lenders have been booming elsewhere in Asia, including in Korea, Taiwan, Japan, Hong Kong and Singapore. Players include both banks and non-bank players.

While most entrants in the field went to target the retail clients, the Monetary Authority of Singapore said it will give up to three of its five digital bank licenses to those eyeing to service SMEs (small and medium-sized enterprises) and other non-retail segments through wholesale banking.

In an earlier report entitled “The Future of Banking: Virtual Banks Chase The Dream in Asia-Pacific,” S&P Global Ratings said that virtual banks has a way to “provide customers with greater banking convenience at a lower cost.”

“From a government standpoint, there is an interest in providing customers with cheaper, more competitive basic banking services in markets that small numbers of large and well-established traditional banks typically dominate,” S&P said. — Luz Wendy T. Noble