Digital bank deposits in the Philippines cross P100-B mark

MANILA, Philippines — The combined deposits of the country’s six digital banks crossed the P100-billion mark as of end-March, outperforming conventional lenders in terms of funding growth, as these purely virtual players continue to offer attractive savings products with high rates.

The latest data from the Bangko Sentral ng Pilipinas (BSP) showed total deposits held by digital banks amounted to P102.3 billion by the end of the first quarter, representing a 33.2-percent growth year-on-year

Those funds—considered a lifeline for banks—were kept in 23.9 million accounts, more than double the number recorded a year ago. Overall, the customer base of digital banks had grown by 112 percent to 15.5 million depositors.

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Such a performance beat the entire Philippine banking system, whose total deposits increased by 5.8 percent to P20.2 trillion. Those funds were spread across 150.8 million bank accounts, up by 19 percent.

That data included traditional big banks that mainly provide loans to borrowers with tested credit profiles—unlike digital banks that cater to underserved markets. According to the BSP, deposits held by large lenders grew by 5.6 percent to P18.9 trillion.

Moving forward, analysts said the decision of the BSP to reopen the digital banking sector to four more players would fire up competition for deposits.

This year, the central bank resumed accepting applications for digital banking licenses, in a bid to expand the industry that initially includes 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 the new digital banks — like the incumbent players — are expected to struggle to build a profitable loan portfolio at first as they mostly serve first-time depositors and borrowers.

For that reason, the BSP said it would tighten its scrutiny of upcoming digital banks, which would have to show the regulator their unique business plans to boost financial inclusion while building a sustainable loan book.