Philippine central bank gearing up for digital marketplace, new digital banks

Up to four new digital banks may enter the market.

The Philippine banking sector is primed for expansion, with an upcoming digital marketplace and with the debut of up to four new digital bank players in the near future.

Chuchi Fonacier, deputy governor for the financial supervision sector at the Bangko Sentral ng Pilipinas (BSP), said that they are aiming to roll-out regulations for a digital marketplace banking model in the next couple of months.

“It will definitely improve financial inclusion, because there would be more touch points and more channels for consumers to be able to access not just financial services, but also products which they feel can also address their needs,” Fonacier told Asian Banking & Finance in an interview during the ABF-IA Manila Forum held at Makati Shangri-La on 1 October.

Fonacier, who served as one of the key speakers during the forum, said that they have already received comments from players and are in the process of fine-tuning the regulations based on the feedback.

Under the digital marketplace banking model, banks will be allowed to have their platform offer products from other financial service providers. 

To start, the BSP is piloting a case study where its personal equity and retirement account service, PERA, is made available in financial institutions’ digital platforms.

Fonacier also touched upon the possibility of new digital banks in the near future after the Monetary Board lifted its moratorium on issuing new licenses.

When asked, Fonacier said that there is space for a new digital bank, but added that the BSP is seeking those that can offer unique business models.

“It has to be something new and [a] unique value proposition that's not being offered currently by the six,” she said.

When asked what a unique business model may look like, Fonacier said that a digital bank focused on Islamic banking could be one. 

There are currently six digital banks in the Philippines: GoTyme Bank, OFBank, Tonik Bank, Uno Digital Bank, UnionDigital Bank, and Maya Bank. Some have their own unique gimmicks: GoTyme Bank has introduced debit card kiosks in grocery stores, OFBank targets OFWs specifically, whilst Tonik Bank offers savings “pockets”, for example.

Prospective players have been reaching out to the BSP even when the moratorium was still in place, she added.

Operational resilience
Whilst new players and models are on the horizon, the BSP actually has operational resiliency in mind as its main focus in 2024.

Fonacier said that BSP is focused on ensuring cyberresilience in the face of a typhoon and other natural calamities. 

“It's important that banks should be able to manage those disruptions and revert with the shortest time possible for them; or something like an area of their operation going down, they should be able to, right away, offer an alternative way for the customer to still access their banking services,” Fonacier said.

The BSP is also working on issuing more sustainability-related regulations.

To start, the central bank has issued its own sustainable finance framework, which provides broad supervisory expectations on the integration of sustainability principles in financial institutions’ corporate governance and risk management frameworks.

To push banks to make more sustainable-aligned loans, the central bank is granting regulatory incentive measures for those who finance eligible projects and activities, Fonacier said.