BSP revealed that digital banks in the PH are encountering challenges
Most digital banks in the Philippines are yet to achieve profitability, with a moratorium on new licenses set to expire this year, according to officials from the Bangko Sentral ng Pilipinas (BSP).
BSP Governor Eli Remolona Jr. noted that none of the digital banks are currently turning a profit. Meanwhile, Central bank Director Melchor Plabasan disclosed that out of the six existing digital banks, only two seem to be operating in the black. Plabasan did not specify which banks are profitable but mentioned that it typically takes five to seven years for a digital bank to become profitable, aligning with global trends where only five percent of digital banks are currently profitable.
The BSP, which issued guidelines for digital bank establishment in 2020, halted the issuance of new licenses less than a year later to monitor the performance and impact of existing digital banks on the financial sector. Only six licenses were granted to entities such as UNO Digital Bank, Tonik Digital Bank, UnionDigital Bank, Overseas Filipino Bank (OFBank), Maya Bank, and GoTyme Bank. These banks have collectively amassed around 8.7 million in deposits, approximately 7 percent of the total accounts held by Philippine banks.
The moratorium on new licenses is set to expire in August, and a report on the sector’s performance will be submitted in April, including recommendations on whether to lift the moratorium partially, completely, or extend it further.
While interest in new digital bank licenses remains high, BSP officials emphasize the need to test business models locally. The BSP established a regulatory “sandbox” last year to mitigate risks associated with financial technology innovations, especially those utilized or intended for use by banks, where regulatory implications might be uncertain.
Business News: BSP revealed that digital banks in the PH are encountering challenges
