BSP lifts moratorium, opens doors for new digital banks

By Francis Allan L. Angelo

The Bangko Sentral ng Pilipinas (BSP) has announced the lifting of its moratorium on new digital banking licenses, effective January 1, 2025.

The BSP’s decision will allow up to 10 digital banks to operate in the Philippines, expanding the current number of digital banks from six to ten.

BSP Governor Eli M. Remolona, Jr. emphasized the importance of this strategic decision, noting that the new limit will enable the BSP to closely monitor the evolving digital banking landscape.

“With this limit, the BSP can closely monitor developments in the digital banking industry, obtain a 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,” Remolona said in a statement.

The decision comes as part of the BSP’s ongoing efforts to harness the potential of digital banks in enhancing financial inclusion while managing associated risks.

The first batch of six digital banks began operations following the issuance of the Digital Banking Framework in December 2020.

The reopening of the application window will allow for four additional digital bank licenses, either from new applicants or through the conversion of existing traditional bank licenses.

Applicants for the new licenses will undergo a rigorous assessment process, focusing on their value proposition, business models, and resource capabilities.

The BSP will also evaluate the transparency of the banks’ ownership structures, the suitability of their shareholders, and the fitness of their directors and senior management.

Only those applicants demonstrating the ability to meet these criteria and offering innovative business models or services not currently available in the market will be granted licenses.

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

The BSP’s decision follows a thorough evaluation of the current digital banks’ operations, focusing on their financial soundness and their success in meeting the policy objectives outlined in the Digital Banking Framework.

This framework aims to promote wider adoption of digital financial services and extend their reach to underserved segments of society.

The moratorium was initially imposed on August 31, 2021, after the approval of six digital bank licenses, to allow the BSP to monitor the performance and impact of these new players on the banking sector.

With the lifting of the moratorium, the BSP continues to pursue its goals of financial inclusion and digital transformation, while ensuring the stability of the financial system.