The Bangko Sentral ng Pilipinas (BSP) is again accepting applications for a digital banking license.
The BSP issued a new circular providing the guidelines for the reopening of the application window for digital banking permits, which will start on Jan. 1, 2025.
Existing banks that will successfully have their current license converted to that for digital lenders have three years to transition to a purely virtual business that is compliant with capital requirements, the BSP said.
READ: More than 4 digital banking slots may open up in 2025
In the document signed by Governor Eli Remolona Jr. on Dec. 26, the BSP said existing banks that would be converted to digital lenders must submit a transition plan that includes the divestment or closure of physical branches, sub branches or branch lite units.
This is because digital banks must have no physical branches, although they may offer financial products and services through agents.
At the same time, the BSP said incumbent lenders that would join the local digital banking market must comply with other applicable rules, including the minimum capitalization of P1 billion and other prudential requirements.
The rules on transitioning to a full digital banking entity will also apply to financial companies that will be required to get a proper license soon since they do not have the correct permit despite operating like a virtual lender.
The BSP earlier this year announced that it would put four new digital banking slots up for grabs next year, in a bid to expand the industry that for now includes only six players: UNO Digital Bank, UnionDigital Bank, GoTyme, Overseas Filipino Bank of state-run Land Bank of the Philippines, Tonik Digital Bank and Maya Bank.
But getting a digital banking license won’t be easy this time. The BSP had said only the applicants that show capacity to meet the minimum criteria and offer a unique value proposition—or develop new and innovative business models not offered by existing players—would be granted a digital banking license.
Central bank officials had said there were companies that have expressed interest in joining the industry. But they added that the BSP won’t try too hard to fill all four digital banking slots if none of the applicants would qualify.