Bangko Sentral ng Pilipinas (BSP) will lift the moratorium on granting new digital banking licenses starting 1 January 2025, allowing up to ten to operate in the country.

This move aims to leverage the benefits of digital banks while managing associated risks.

Since the introduction of the Digital Banking Framework in December 2020, six digital banks have been established in the country.

Among them are Tonik, Maya Bank, Overseas Filipino Bank (OFBank), UNObank, UnionDigital Bank, and GoTyme Bank.

The new decision will permit four additional licenses, available to both new applicants and existing banks seeking conversion.

Prospective digital banks will undergo a stringent licensing process.

This process will evaluate their business models, resource capabilities, and compliance with standard criteria, including transparency in ownership, shareholder suitability, management fitness, capital adequacy, and strategic plans.

Only applicants demonstrating a unique value proposition or innovative business models not currently available will be considered.

Governor Eli M. Remolona, Jr. emphasised that the decision was based on the current digital banks’ financial health and their role in promoting digital financial services and financial inclusion.

The BSP had previously limited digital bank licenses to six and paused applications in August 2021 to assess the sector’s performance and its contribution to digital transformation and financial inclusion goals.

Governor Eli added,

“With this limit, the BSP can closely monitor developments in the digital banking industry, obtain broader perspective as these banks mature further in their operations, as well as assess the impact of the entry of new players on the banking system.

Applicants must bring something new to the table. We want to see unique product and service offerings that are different from that offered by the existing market players. These offerings should have significant potential to reach broader clientele, particularly the untapped or underserved market segments.”

BSP’s move contrasts with the Hong Kong Monetary Authority (HKMA), which recently announced that it will not issue any more digital bank licenses following its comprehensive review of its eight existing virtual banks.