A European digital bank has submitted an application for a digital banking license in the Philippines, according to the Bangko Sentral ng Pilipinas (BSP). BSP Deputy Governor Chuchi G. Fonacier confirmed on Tuesday that this particular digital bank has completed the necessary application requirements.

Ms. Fonacier noted that while other digital banks have expressed interest in applying, they are still in the process of fulfilling their documentary requirements. The BSP had previously lifted a three-year moratorium on digital banking licenses in January, allowing for an additional four players to enter the market, either as new entities or by converting existing licenses.

Currently, six digital banks operate in the Philippines. The BSP’s criteria for applicants include bringing “something new to the table” and offering innovative products aimed at underserved and untapped markets.

Ms. Fonacier indicated that the European applicant has proposals to engage with underserved segments and utilises artificial intelligence (AI) to provide users with access to transactional and credit data. She explained that this bank has a method to easily gather such information, with AI playing a role.

Regarding the financial performance of the digital banking sector, Ms. Fonacier stated that only two active digital banks are currently profitable, but the industry is expected to reach a break-even point. She acknowledged that it is typical for start-ups to go through an initial period of establishing their presence.

The six operating digital banks in the Philippines include Tonik Digital Bank, Inc., GoTyme Bank, Maya Bank, Overseas Filipino Bank, UNObank, and UnionDigital Bank.

Preliminary data from the BSP indicates that the digital banking sector recorded a PHP 1.04-billion net loss as of the end of March. The digital banking industry has shown net losses since the BSP began consolidating data in March 2023.

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