Philippines to cap digital bank licences in the country to seven, for now

Photo: Nathan Dumlao / Unsplash.com

The Philippines central bank on Thursday said it will stop accepting digital bank licence applications next month and will cap the number of players to seven for now.

The move will allow regulators to monitor the performance of the new players aiming to challenge the country’s traditional lenders, central bank Gov. Benjamin Diokno said.

The new category, introduced late last year for online-only banks, has attracted interest from so-called neobanks backed by foreign investors as well as from traditional banks pivoting to digital services.

Applicants see a large potential market in a country where around 70% of the population does not have a bank account and where the use of fintech platforms grew explosively during the pandemic.

With five licences already issued, and two applications being processed, the window for new applications is in effect closed. “If you submit an application at this time — because we made it clear that it’s on a first come, first served basis — your chances of getting in are very slim,” Diokno said.

The five licence holders are: state-backed Overseas Filipino Bank; neobanks Tonik and UNO Bank; Union Digital Bank, an arm of Union Bank of the Philippines; and GOtyme, a partnership between Singapore-headquartered fintech Tyme and Gokongwei Group, a Philippine conglomerate.

The central bank did not disclose the two pending applications, but KKR-backed mobile wallet Paymaya in June said it had filed an application. Local private lenders Rizal Commercial Banking and Philippine National Bank were also eyeing a license.

“The closure of the application window will allow the [central bank] to monitor the performance and impact of digital banks on the banking system and their contribution to the financial inclusion agenda,” Diokno said.

“We need to ensure that the business environment continues to allow healthy competition among banks enabling them to offer innovative and competitive financial products and services to their clients,” he added.

The freeze will be reviewed after three years.

“If there is a need for lifting the limit, we will do so,” Diokno said. “But if in our judgment seven is enough, then there will be no additional digital bank in the future.”

The article was first published on Nikkei Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.