IT MAY TAKE two to three years for the Bangko Sentral ng Pilipinas (BSP) to accept new applications for digital banks as it still needs to boost its capacity to regulate these kinds of lenders, according to its incoming chief.

“We should have at least enough examiners, enough experts to regulate and protect the public. That’s the reason… We have to be very, very careful,” current Monetary Board member and incoming BSP Governor Felipe M. Medalla told BusinessWorld in a roundtable discussion with editors on June 14.

The central bank capped the number of digital banking licenses to six last year, after the remaining applicants failed to meet the requirements.

Mr. Medalla said the BSP should further develop its capacity to regulate digital banks before allowing rapid expansion.

“Our ability to regulate must also grow,” he said. “We don’t hate competition but we better have the capacity to regulate, and not be outstripped by growth of what we regulate.”

Asked how long it would take to achieve this expanded capacity, Mr. Medalla said: “Maybe two or three years. Then our capacity will be equal to the tasks that we can clearly say ‘anyone who wants to come in and meets the capital requirements and the technical requirements’ (can come in).”

The Philippines’ current cap on licenses is comparable to those of its neighboring countries such as Singapore, which has granted four licenses and Malaysia, which approved five.

In December 2020, the BSP released the guidelines for establishing digital banks in the country, distinguishing them from traditional banks.

Under BSP Circular No. 1105, a digital bank is defined as an institution that offers financial products and services through digital and electronic channels without physical branches.

A minimum capital of P1 billion is required to establish a digital bank in the Philippines.

Just as with traditional banks, digital banks are also allowed to grant loans, accept savings, time deposits and foreign currency deposits, invest in securities, issue e-money products and credit cards, sell micro-insurance products, and buy and sell foreign exchange currencies, among others.

The six digital banks that secured licenses to operate in the country are Tonik Digital Bank, Inc.; GOtyme of the Gokongwei Group and Singapore-based Tyme; Maya Bank of Voyager Innovations, Inc.; Overseas Filipino Bank (OFBank),  subsidiary of Land Bank of the Philippines; UNObank of DigibankASIA Pte. Ltd.; and UnionDigital of UnionBank of the Philippines.

These all-online banks are expected to help the BSP reach its goal to bring 70% of Filipino adults into the banked population and 50% of payments done online by 2023. — Keisha B. Ta-asan