BSP approves regulatory framework for digital banks

THE MONETARY BOARD has approved a regulatory framework for digital banks, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Thursday.

“We see these [digital] banks as additional partners in further promoting market efficiencies and expanding access of Filipinos to a broad range of financial services,” Mr. Diokno told reporters via Viber.

Under the framework, digital lenders will be classified differently from universal, commercial, thrift, rural, cooperative, and Islamic banks.

The Monetary Board may also limit the number of digital banks that may be established, considering the total number of applications received and the current banking landscape in the country.

“Essentially, the BSP is looking to attract players with strong value proposition, sufficient financial strength, technical expertise of management and effective risk management,” Mr. Diokno said.

The latest draft of the framework was released last month. Among the proposed provisions was a minimum capital requirement of P1 billion for digital banks.

The approved framework has yet to be released.

BSP Deputy Governor Chuchi G. Fonacier confirmed in a text message on Thursday that the minimum P1-billion capital requirement was retained in the approved framework.

Digital banks need to pay the BSP a P250,000 application fee and a P12.5-million license fee, based on the latest proposal.

These lenders are also expected to maintain a main office for management and support operations for customer concerns and as a point of contact for the BSP and other regulators, the central bank said.

“Digital banks are also allowed to tap cash agents and other qualified service providers subject to existing regulations to complement the innovative delivery of financial services,” it added.

Mr. Diokno has said that digital banks could help the BSP achieve its goal to bring 70% of adult Filipinos into the financial system and to have at least 50% of payments by volume and value done digitally by 2023.

Only 29% of Filipino adults had accounts with financial institutions as of 2019, leaving some 51.2 million unbanked, BSP data showed.

Meanwhile, e-payments made up 10% of the total transaction volume in the country in 2018 from only 1% in 2013, data from the Better Than Cash Alliance showed. By value, online transactions made up 20% of the total in 2018 from just 8% in 2013.

“It is our long-term goal to see more digital-savvy Pinoys, such that it becomes second nature for them to perform routine financial transactions online — making payments and fund transfers, or availing of credit, insurance, and investments,” Mr. Diokno said in a forum on Thursday. — L.W.T. Noble