Three of the six digital banks that have started operations since 2021 have onboarded 120,000 deposit accounts. More positively, the numbers are seen to rise further once the three other banks begin operations this year.
Digital banks will significantly contribute to the growth and development of the digital financial ecosystem catalysing the achievement of the financial inclusion and digital transformation goals. This can spell the difference in digital bank operations and in greater market penetration, especially since 47 per cent of Filipino adults are still unbanked. As cloud natives, their financial services can quickly cover broader distances at much lower costs than traditional brick and mortar banks.
– Benjamin Diokno, Governor, Bangko Sentral ng Pilipinas
As they accumulate success, their numbers are also growing. One of the digital banks that have started account openings is a subsidiary of the state-owned Land Bank of the Philippines (Landbank). Just recently, a new digital bank has started operations. Moreover, another three are set to start operations within the year. Some of the major private banks of the country have entered the scene, branching out into digital banks.
Diokno said the government-owned digital bank is nearing completion of the three-stage licensing process to operate as a full-fledged digital bank while two other digital banks have completed the process. One of these digital banks began its operations on 14 February 2022 while another started on 14 March 2022.
He stressed how much these banks are helping the economy. Specifically, he mentioned that they are among the key enablers of the country’s digital transformation since they offer innovative and fully-digital products without the need for physical branches. Diokno said the sector is also a big boost in empowering micro, small, and medium enterprises (MSMEs), which account for around 99.6 per cent of businesses in the country.
Among the product offerings of the digital banks to date include corporate deposits and credit, which, Diokno said “enable MSMEs to access a transaction account for payment collection, disbursement, and bills payment.”
With these innovations, Diokno emphasised the central bank’s commitment. It remains committed to providing an enabling regulatory environment that fosters digital innovation and transformation while ensuring that attendant risks are effectively managed. He said that the BSP continues to enhance regulations to promote a secure environment for digital banks’ and these measures include the issuance of amending Information Technology risk management policies, particularly on the implementation of automated and real-time fraud monitoring and detection systems.
He is mindful of the risks of digital banking. The country’s top bank manager stressed that the BSP has consistently been proactive in promoting cyber resiliency and advocating for the zero-trust model to strengthen cybersecurity and IT risk management regulations.
The country is much aware of how digital transformation is changing lives. For instance, there’s the issue of connectivity. Knowing how important the internet is and how much having access can spur the economy, it is seriously considering the use of satellite technology and has started talks with one of the biggest space technology companies in the world. Recently, the Philippine government implemented the use of smart technology to save energy in light of the ongoing fuel crisis as reported on OpenGov Asia.
