Aboitiz-led Union Bank of the Philippines has obtained approval from the Bangko Sentral ng Pilipinas (BSP) to establish a wholly owned digital banking subsidiary to be known as Union Digital Bank.
As it had entered the digital banking business through platform EON long before the issuance by the banking regulator of the framework to govern this new distinct classification of banks, UnionBank is expected to fold EON into this new subsidiary.
Specially designed for digital commerce, EON started as a debit card product over a decade ago but launched as a mobile-only platform in 2016. This was meant to be UnionBank’s primary product for bringing to formal banking channels the unbanked and underbanked segments through its partnerships with cooperatives and local governments for loans and aid disbursement.
Since then, EON has enlisted over a million cardholders. It also operates small lending activities on an experimental basis.
By getting its own banking license, EON can operate as a distinct banking platform without having to start from scratch.
EON was the first electronic money product in the Philippines with a “selfie banking” feature, which employs facial recognition for account opening.
By issuing the framework for digital banking late last year, the BSP recognized the role of digital platforms in driving greater efficiency of financial products and services and in expanding the reach of the banking system to a broader market.
The BSP defines a digital bank as one that offers financial products and services that are processed end-to-end through a digital platform and/or electronic channels with no physical branch/subbranch or branch-light unit offering such products and services.
The minimum capitalization requirement for digital banks is P1 billion.