Digital bank in Europe eyes entry into Philippine market
BSP Deputy Governor Chuchi Fonacier
MANILA, Philippines — A European digital bank is at the initial stage of clearing regulatory hurdles before it can finally enter the Philippine market, a development that could fire up competition in the local virtual lending space.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi Fonacier said the foreign company was in the process of completing the documentary requirements for it to become a player in the domestic market. She, however, declined to name the applicant.
While there are companies that have expressed interest in applying for a license, Fonacier, head of the BSP unit that regulates banks, said the European firm was so far the only one that has actually filed an application and is already doing the paperwork.
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“It’s still in the initial stage. There are requirements that need to be hurdled,” she told reporters on the sidelines of an antiscam campaign launch at the BSP head office in Manila.
This year, the BSP resumed accepting applications for digital banking licenses in a bid to expand the industry that for now includes only six players.
Incumbents digital banks
The incumbents are UNO Digital Bank, UnionDigital Bank, GoTyme, Overseas Filipino Bank of state-run Land Bank of the Philippines, Tonik Digital Bank and Maya Bank. The BSP will accept four more players in the industry, which is expected to intensify competition for deposits, a major lifeline for banks.
But getting such a license is much harder this time around.
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Only the applicants that can show capacity to offer a unique value proposition—or develop new and innovative business models not offered by existing players—will be granted a digital banking permit. This is on top of the minimum capitalization of P1 billion and other prudential requirements that digital lenders must meet.
Fonacier said the European digital bank presented a business solution that seeks to close some gaps that the incumbents have not yet covered, such as lending to micro, small and medium enterprises.
The foreign company also has its own technology that can easily collect the credit information of borrowers based on data like retail purchases and other financial transactions.
