In the Philippines, a digital bank is a distinct classification of bank as defined by the Bangko Sentral ng Pilipinas (BSP). It was created as the BSP saw the role of digital platforms in efficiently delivering financial products and services, and in expanding reach into the unserved and underserved market segments.
The regulations for digital banks were established in 2020, making this the newest type of bank in the country. It joins the existing types of commercial, universal, thrift, rural, cooperative and Islamic banks.
Like them, it also regulated by the BSP and has deposits insured by the Philippine Deposit Insurance Corporation (PDIC).
Fully digital capabilities
There is one main thing that sets banks in this classification apart from others: Digital banks offer financial products and services which are processed completely end-to-end through a digital platform and/or electronic channels.
This means that they can’t have a physical branch, sub-branch or branch-lite units which offer financial products and services.
However, they’re required to have a physical office in the Philippines for purposes of management and administration of its affairs. This also serves as the main point of contact for stakeholders such as regulators, and can be used as the central hub for receiving and addressing customer issues too.
Among the products and services that digital banks can offer are loans, savings and time deposits, credit cards, foreign exchange and certain microinsurance products. Other activities can also be offered, as long as Monetary Board approval is obtained first.
The BSP will not receive any more digital bank applications until December 2024. As such, the Philippines will only have 6 digital banks until then. These are OF Bank, Tonik Bank, UNObank, UnionDigital, GOtyme, and Maya Bank.
Compared with other banks
Digital banks aren’t the only banks that can offer financial products and services through a digital platform and electronic channels.
In fact, banks belonging to other classifications (commercial, universal, thrift, rural, cooperative and Islamic banks) can do these too, as long as they have the BSP license on electronic payment and financial services.
However, they can’t market themselves as digital banks if they belong to a different type, because banks can only be in one classification.
This means that only a bank that holds a digital banking license can represent itself to the public as a digital bank, in connection with its business name.
