Digital Banks Finally Coming To The Philippines
Mar 21, 2021

Digital banks – also known as neobanks – are preparing their market entry into the Philippines as the country’s central bank is in the process of issuing them licenses by 2022, according to a report by S&P Global Market Intelligence.

The Bangko Sentral ng Pilipinas in November 2020 approved a new license category for digital banks and since has received two applications as of February this year, one from a new player and the other from an existing bank to convert into a digital bank, the report cited the central bank’s deputy governor Chuchi Fonacier as saying.

He emphasised that digital banks in particular could improve financial inclusion as they would reduce the barriers that hinder financial access for potential clients with small and irregular income, geographical distance and lack of proper documentation.

Digital banking to support financial inclusion

The digital technology of such Internet-only neobanks could also offer financial products and services that would bridge the market gaps in the unserved and underserved segments, he added.

As a background, banking penetration in the Philippines is among the lowest in Southeast Asia. The number of unbanked Filipino adults was estimated at 51.2 million, out of a total adult population of 72 million in 2019, according to the central bank, which sees the digital banking framework as an integral component of is efforts toward the transformation of the Philippine financial sector.

The target set by the central bank is to shift at least 50 per cent of all retail payment transactions to digital platforms and have 70 per cent of adults to use digital bank accounts by 2023, Fonacier said.