The central bank of the Philippines will resume accepting applications for digital banking licenses after a three-year moratorium, signaling a significant expansion in the burgeoning sector.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said the number of available slots for new entrants will be disclosed shortly, opening doors for more players in the rapidly growing digital banking landscape.
The decision to invite new digital banks follows a comprehensive review by the BSP of the existing operators in the market, which currently includes UNO Digital Bank, UnionDigital Bank, GoTyme, Overseas Filipino Bank by the state-run Land Bank of the Philippines, Tonik Digital Bank, and Maya Bank.
The central bank has also indicated plans to publish an industry report later this year, which will assess the overall performance and impact of these digital entities on the financial system.
Remolona expressed enthusiasm about the interest shown by several companies eager to enter the local digital banking sector.
In 2021, the BSP had instituted a temporary freeze on new digital banking licenses to allow the regulator sufficient time to evaluate the performance of these modern lenders and their effects on the broader financial ecosystem.
Recent data from the BSP revealed challenges within the sector, with P4.9 billion of the total loan portfolio held by digital banks classified as nonperforming as of May—meaning the loans were over 90 days overdue.
This situation marks a gross nonperforming loan (NPL) ratio of 20.64 percent, a rise from 17.69 percent in the previous month, highlighting the risks and volatility in this nascent banking segment.
The reopening of the licensing process is seen as a move to infuse new energy and competition into the digital banking industry, potentially spurring innovations and services that could benefit the broader economy, according to analysts.