Metro Manila (CNN Philippines, November 26) — The Bangko Sentral ng Pilipinas is giving another boost to e-payments by approving a new set of rules for purely digital banks.
A Thursday statement announced the Monetary Board has approved the recognition of digital banks and a separate set of rules for them to follow. In principle, the framework acknowledges fully-online banks – or those that accept deposits and fund transfer requests – as legitimate entities even if they do not have brick-and-mortar branches.
“The BSP is looking to attract players with strong value proposition, sufficient financial strength, technical expertise of management and effective risk management,” BSP Governor Benjamin Diokno said.
Diokno wants at least 50% of all financial transactions in the country migrated to e-payments by 2023, the end of his term as BSP chief and a target he inherited from the late Governor Nestor Espenilla, Jr.
The draft regulation published on the BSP website recognize the “greater efficiency” for financial services through these online banks, which could also be the ticket to bring more unbanked Filipinos into the formal banking system.
The rules cover entities that process end-to-end transactions “through a digital platform and/or electronic channels,” counting them as another path towards greater financial inclusion and digitalization.
“Digital banking applicants are expected to have sound digital governance, robust, secure and resilient technology infrastructure, and effective data management strategy and practices,” the BSP said, noting that such entities are still covered by existing requirements to minimize operational risks. The difference is that these online-only lenders are also more prone to cybersecurity and money laundering breaches, the regulator added.
These digital banks still need a physical head office anywhere in the Philippines meant to cater to management and support staff, including the handling of customer concerns.
All financial products and services must be offered on the web or through an app. However, digital banks may tap cash agents and other service providers through service deals for withdrawals and similar services.
This is the seventh category for lenders, next to universal, commercial, thrift, rural, cooperative, and Islamic banks.
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