The Philippines anticipates a surge in digital banking with the potential arrival of up to 10 new players, promising increased competition and greater financial inclusion.
The Bangko Sentral ng Pilipinas (BSP) announced that it has lifted the moratorium on new digital banking licenses in the Philippines back on 1st January 2025. The decision aims to open opportunities for new players to enter the digital banking sector.
Introduced in 2021, the moratorium allowed the BSP to refine regulations for digital banks. The BSP targets to attract more participants; however, it will maintain safeguards to ensure financial stability and consumer protection.
The move is likely to boost competition and innovation, providing consumers with better financial services.
There are currently a limited number of digital banks in the Philippines. And as of today, traditional banking institutions are the ones that offer the most services.
With the lifting of the restrictions, the Philippines could potentially have up to 10 digital banks. The entry of new players could diversify the market, aligning with ongoing efforts to enhance financial inclusion for underserved populations.
For a geographically dispersed nation like the Philippines, digital banks play a vital role in improving financial accessibility.
The lifting of the digital banking licenses moratorium in the Philippines comes alongside significant progress in digital payments and government-led financial digitalisation initiatives. However, some challenges must be addressed to maximise the benefits of this policy change.
These challenges include cybersecurity risks, operational reliability, and not to forget digital literacy.
This regulatory update reflects the BSP’s adaptability to technological advancements in financial services. Applicants for licenses must demonstrate strong capabilities to meet regulatory standards, ensuring only qualified entities join the market and uphold its integrity.
As the sector anticipates new entrants, comparisons with similar reforms in other countries suggest a potential for increased competition and better consumer choices. The success of this initiative will shape the future of digital banking in the Philippines.
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