Manila, Philippines: The Bangko Sentral ng Pilipinas (BSP) announced on August 8 that it will resume issuing new digital banking licenses starting January 1, 2025. This decision by the BSP's Monetary Board will allow for the issuance of up to four additional digital banking licenses, further expanding the sector in the Philippines, according to a report by Manila Standard.

The goal of this move is to leverage the potential of digital banks to strengthen the Philippine financial system while maintaining proper risk management. Since the Digital Banking Framework was introduced in December 2020, six digital banks have begun operations in the country. The upcoming lifting of the moratorium will enable either the creation of new digital banks or the conversion of existing bank licenses into digital ones.

BSP Governor Eli Remolona Jr. stated that the limitation on new licenses is meant to allow the BSP to closely monitor the industry's development. "This strategy provides us with a broader perspective as these banks continue to evolve, allowing us to assess the impact of new entrants on the banking system," Remolona explained.

The application process for these new digital bank licenses will be stringent, emphasizing the value propositions, business models, and resource capabilities of applicants. Prospective digital banks will need to meet several standard licensing requirements, including ownership transparency, shareholder suitability, the qualifications of directors and senior management, adequate capital, and strong corporate governance and risk management practices.

The BSP will issue licenses only to applicants who present unique value propositions or innovative business models. Candidates must demonstrate their ability to implement effective digital solutions and grow their business sustainably in the Philippines. "We seek applicants who offer new and distinctive services with significant potential to reach underserved or untapped market segments," Remolona added.

Previously, the BSP had limited the number of digital banking licenses to six and temporarily paused the application process on August 31, 2021. This pause was put in place to evaluate the performance and impact of existing digital banks and their contribution to the BSP’s goals of digital transformation and financial inclusion.

Reopening the licensing process aligns with the BSP's commitment to ensuring financial system stability, promoting financial inclusion, and advancing digital transformation in the country.