By Luisa Maria Jacinta C. Jocson, Reporter
TWO FOREIGN digital banking players are interested in entering the Philippine market, the Bangko Sentral ng Pilipinas (BSP) said.
“There is no official filing yet, but there are two very interested players. There’s still no formal application because they’re trying to complete the documentary requirements, but they are very much interested,” BSP Deputy Governor Chuchi G. Fonacier said over the weekend.
These potential applicants already operate digital banks in other jurisdictions but will be new players in the Philippines, she added.
The Monetary Board lifted a three-year moratorium on new digital banking licenses effective January.
The BSP is now set to allow four more digital banks to operate in the country, which would bring the total to 10. These can either be new applicants or banks that will convert their existing license to a digital one.
The central bank said applicants must “bring something new to the table” and offer innovative products to better reach underserved and untapped markets. They will also undergo a rigorous licensing process that will evaluate their value proposition, business models and resource capabilities.
There is no definite timeline as to when these potential new players will be awarded licenses as this would depend on their compliance with the central bank’s requirements, Ms. Fonacier said.
“The very requirement of the governor and the Monetary Board is that they should really have a very good value proposition. They should not have an existing business model of another player,” she said.
“We cannot say right away that the two interested (players) will be automatic because they were the first to file. We will base it on the evaluation… It’s not just submitting documentary requirements, but rather, they really need to describe their business model.”
As part of the application process, firms will need to give the BSP a walkthrough of their specific plans and business models, Ms. Fonacier added.
The six digital banks currently operating in the Philippines are Tonik Digital Bank, Inc.; GoTyme Bank of the Gokongwei group and Singapore-based Tyme; Maya Bank of Voyager Innovations, Inc.; Overseas Filipino Bank, a subsidiary of Land Bank of the Philippines; UNObank of DigibankASIA Pte. Ltd.; and UnionDigital Bank of Union Bank of the Philippines, Inc.
ISLAMIC DIGITAL BANKSMeanwhile, Ms. Fonacier said two Islamic lenders are also looking to set up digital banks in the country.
“When I joined the Malaysian leg in the roadshow, one bank was asking about the possibility of becoming the first Islamic digital bank,” she said. “That was last year, so we said, the moratorium for digital banks will be lifted, so it’s very much possible.”
This Islamic bank is already present in the Philippines and is seeking to venture into digital banking as well, she added.
Another foreign Islamic bank, a “major player in Malaysia,” is also interested in setting up shop in the Philippines, Ms. Fonacier said.
“It will depend on them who will become the first Islamic digital bank.”
The BSP has been working to expand Islamic finance in the country. Ms. Fonacier said they are hoping to encourage more players in Islamic banking.
The three entities with Islamic banking operations in the country are the state-owned Al Amanah Islamic Investment Bank, Maybank Philippines, and CARD Bank, Inc., which opened an Islamic banking branch in Cotabato City last year.
“Right now, there are only three, so maybe it would be good to have up to maybe six or about seven [additional players]. With more players, there would be more competition,” the official said.
“With the roadshows we conducted in Indonesia and Malaysia, we were able to entice a major player in Islamic banking to put up shop or to be present in the Philippine market.”
She added that the central bank is also in support of another Sukuk bond issuance, preferably peso-denominated.
“The Bureau of the Treasury is also mulling another Sukuk sovereign issuance, or it could be a peso Sukuk — that’s what the Governor is saying. We already did a dollar Sukuk. It would be nice to do a peso Sukuk. Those are the major (milestones) we are expecting.”
In December 2023, the Philippine government issued its first-ever Islamic bonds, raising $1 billion from the sale of 5.5-year dollar-denominated Sukuk bonds.
Sukuk or Islamic bonds are certificates that represent a proportional undivided ownership right in tangible assets, or a pool of tangible assets. These assets could be in a specific project or investment activity that is Shari’ah-compliant.
