MANILA, Philippines — Two banks, including a rural bank and a European player, have formally expressed intent to convert or enter as digital banks, as the Bangko Sentral ng Pilipinas (BSP) pushes for a level playing field among digital-first lenders.
In an interview with The STAR, BSP Deputy Governor Chuchi Fonacier confirmed that a rural bank has already submitted its application to convert into a digital bank, while another application is underway.
“So far, we have one that’s seriously pursuing the conversion to a digital bank. It’s a rural bank and it has already submitted its application. The other one is still completing the requirements,” Fonacier said.
She noted that the process of converting from a rural bank to a digital bank is relatively straightforward compared to the entry of foreign players. “It’s easier since they’re just converting their physical offices into digital. Only one head office is allowed under the digital bank framework,” she said.
According to Fonacier, the BSP has been engaging with the rural bank since late last year.
Aside from the rural bank, Fonacier said a European financial institution is also in talks with the BSP for possible entry, with a specific focus on serving the underbanked segment in the country.
“Their target really is the underbanked,” Fonacier said, without disclosing further details.
Currently, only two of the six licensed digital banks in the country are profitable, Fonacier said. She pointed out that those with existing parent companies are more financially sustainable due to built-in ecosystems that support their operations.
“The other (digital banks) forecast profitability only after five years, based on their business models,” she added.