Monetary Board okays digital banks as another bank type
The Philippine monetary authorities’ bid to increase digital payments’ share to at least half of total retail transactions by 2023 got another boost after the policy-making Monetary Board (MB) recognized digital bank as another bank classification.
In a press release Thursday, the central bank said the MB has approved the recognition of digital bank as separate from existing classification, citing that its products and services ”are processed end-to-end through a digital platform and/or electronic channels with no physical branches.”
“We see these banks as additional partners in further promoting market efficiencies and expanding access of Filipinos to a broad range of financial services, bringing us closer to the realization of our target that at least 50 percent of total retail payment transactions have shifted to digital, and 70 percent of adult Filipinos have transaction accounts by the year 2023. This is seen to remove sticky points and leapfrog our financial inclusiveness agenda” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said.
The BSP said digital banks will be subjected to the same prudential requirements as the other banks.
Although its products and services will be delivered through a digital platform, these banks are still required to have a physical office “to house the offices of management and other support operations and serve as the main hub for customer concerns handling and point of contact for stakeholders, including the BSP and other regulators.”
“Digital banks are also allowed to tap cash agents and other qualified service providers subject to existing regulations to complement the innovative delivery of financial services,” the central bank said.
Diokno, in his speech during the opening of the two-day virtual Financial Education Stakeholders Expo, on Thursday reiterated that the pandemic bolstered the achievement of the central bank’s goal to increase digital payments transactions in the country.
He said many Filipinos are still adamant to tap digital payments due to several factors like lack of information or fear of usage errors and loss of money in the digital world.
He raised the need for the BSP and the financial service providers to expand cybersecurity awareness and digital literary programs.
“With a mix of enabling policies and regulations, as well as risk management systems and proactive collaboration across the industry, financial consumers can be assured of the integrity of the digital finance ecosystem,” he said.
While regulators and service providers ensure the safety of the system, Diokno said consumers also play a vital role in protecting their personal account information and their money.
“While digitization of financial services is exposed to cyber threats and online scams, the first line of defense is our vigilance as users,” he said. (PNA)