SIX DIGITAL BANKS: The Bangko Sentral ng Pilipinas (BSP), the country's central monetary authority, has created a new category of banks — known as “neobanks” — awarding six digital banking licenses so far. A cut-off time was given on September 1, 2021 for digital bank applications, with only six making it to the cut. The country will only have 6 digital banks for now, BSP Governor Benjamin Diokno told local media recently. It's not immediately clear when new licenses will be granted. The Duterte government in keen on pushing financial inclusion via fintech: Some $20 billion e-crash transactions were recorded in the country 2020 alone. [https://gulfnews.com/1.1610273906658]
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SPIKE IN USAGE: Finder’s global fintech editor Elizabeth Barry said digital-only banking usage in the Philippines is expected to increase far faster than the global average. By 2026, Asia will have four of the top five countries for digital banking adoption. According to a recent report from finder.com, digital-only banking penetration in the Philippines is expected to double in the next five years, and that by 2026, 36 percent of Filipinos or around 26 million people will have a digital-only bank account.
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LICENSEES: The six digital bank licensees are Overseas Filipino Bank, UNOBank, Maya Bank, UnionDigital, Gotyme and Tonik Digital Bank. With the new licenses, the Southeast Asian country is step up its foray into fintech, enabled by faster and more reliable internet connections. Internet speed in the Philippines has improved 523% in the last 5 years. Following are the six newly-licensed digital banks in the Philippines:
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1. OVERSEAS FILIPINO BANK: The Overseas Filipino Bank (OFBank) is the first licensed digital-only bank in the country, and forms part of the Land Bank of the Philippines, the government’s official depository bank. With its AI-supported operations, clients can open accounts in real time on both iPhone and Android devices. The service is designed for Overseas Filipinos and Overseas Filipino Workers (OFWs), and an OFBank Debit Account for beneficiaries below 18 years old. Using its mobile app, clients can transfer funds to OFBank and LANDBANK accounts free of charge, transfer funds to accounts in other banks via InstaPay or PesoNet, pay bills online to online merchants, pay cashless via Point-of-Sale (POS) terminals, and withdraw cash through local and international ATMs, among others.
Image Credit: Overseas Filipino Bank Facebook
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2. UNOBank: UNO is the first fintech to get a digital banking license from the BSP. Backed by Singapore-based FinTech company DigibankASIA Pte Ltd, UNOBank offers a bouquet of services: face recognition, voice identify, machine learning, and a one-minute approval of credit application. Cognito, an AI-first approach to banking used by Uno, uses AI to facilitate “customer onboarding", transaction authorisations, alternate data-based credit scoring, product and interface personalisation to advanced security, risk and privacy management systems.
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3. GOTYME: On August 16, 2021, the BSP granted a digital banking license to GOTyme, a venture between Gokongwei group and Singapore-based digital banking group Tyme. JG Summit, the holding company of the Gokongwei Group, announced a partnership with Tyme earlier this year, investing $110 million (about P5.3 billion) along with private equity fund Apis Partners to expand the Tyme brand in the Philippines, South Africa, and Malaysia.
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4. UNIONDIGITAL: The Philippine central bank approved UnionBank’s digital bank license in July, making it the fourth applicant to be granted digital bank license in the Philippines. The new lender, called UnionDigital will be a wholly-owned subsidiary of UnionBank, the listed Aboitiz-led bank. It is set to start its operations in the second quarter of 2022, according to a company executive.
Image Credit: Union Bank / Facebook
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5. MAYA BANK: The BSP approved on September 1, 2021 the digital banking licence of PayMaya, the financial arm of PLDT’s digital unit Voyager Innovations. The company said they will focus on the "unbanked and underserved” population of consumers and micro, small, and medium-sized enterprises (MSMEs). It also boasts of an “end-to-end financial ecosystem” with a widely used e-wallet, PayMaya, an extensive digital remittance network through Smart Padala, and the largest non-bank merchant payments processing business. Maya Bank stated it will launch in the first quarter of 2022.
Image Credit: Pay Maya / Twitter
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6. TONIK DIGITAL BANK: Tonik Digital Bank Inc. is another digital-only bank licensee in the country. It currently offers interest rates of up to 6% per year for time deposits as well as products dubbed “Solo Stash” and “Group Stash” that can earn up to 4% and 4.5% per year, respectively. In its first month of operations, Tonik’s Philippine subsidiary secured P1 billion in consumer deposits. Eight months since it went live last March, it has racked up more than P5 billion in deposits. It is now embarking on lending operations that takes less than 15 minutes of processing. “We built Tonik to accelerate financial inclusion to more Filipinos, who deserve to have the fully-digital ease and convenience in their banking experience,” Tonik founder and chief executive Greg Krasnov said in a statement.
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