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Philippines: BSP sets moratorium on digital bank licenses
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has imposed a three-year moratorium on the grant of digital banking licenses starting next month to closely monitor the performance and impact of the new banking classification on the industry.
In his weekly virtual press conference, BSP Governor Benjamin Diokno said the central bank’s Monetary Board has decided to stop accepting applications for digital banking licenses for three years after limiting the number of new players to seven.
“The judgment of the Monetary Board is that we keep it closed for three years so that we can closely monitor and so we can gain experience on digital banking. So if there is a need for lifting the limit, we will do so. But if under our judgment, seven is enough there will be no additional digital banks in the future,” Diokno said.
He said the regulator would no longer accept applications for new digital banks as part of its overall thrust of maintaining a stable and competitive environment for banks.
“The closure of the application window will allow the BSP to monitor the performance and impact of digital banks on the banking system and their contribution to the financial inclusion agenda,” he added.
The Monetary Board has so far approved five digital banking licenses: Overseas Filipino Bank, Tonik Digital Bank, UNObank, Union Digital Bank and GOtyme.
Diokno said the regulator is evaluating the application of two more entities. PayMaya’s Voyager Innovations earlier said it had a pending application with the BSP.
“We need to ensure that the business environment continues to allow healthy competition among banks, enabling them to offer innovative and competitive financial products and services to their clients,” the BSP chief said.
He said other countries have also imposed a limit on the number of digital banks.
According to the BSP, applications with complete documentation submitted before on or before Aug. 31 this year will be processed on a first-come, first-served basis and will be assessed for completeness and sufficiency of information as well as compliance with the licensing criteria on the establishment of digital banks.
The applications with noted documentary deficiencies or which do not meet the BSP’s pre-qualification criteria including the P1-billion minimum capital requirement would be returned and would not be subject to further processing.
The BSP embarked on a Digital Payments Transformation Roadmap to convert 50 percent of total retail transactions in the country to electronic channels and to raise the number of Filipinos owning financial accounts to 70 percent by 2023.
“As these tech-savvy, customer-centric players introduce innovations in the banking sector, we are confident that the BSP is on track to achieving its digitalization and financial inclusion goals,” Diokno said.
Source: https://www.philstar.com/business/2021/08/20/2121184/bsp-sets-moratorium-digital-bank-licenses