NextGen Day

Given that they are categorized as complex banks, digital banks must adhere to prudential regulations and guidelines, such as those imposed on universal and commercial banks (U/KBs).

Digital banks are required to have corporate governance frameworks and risk management systems, such as information technology (IT) and cyber security, outsourcing, consumer protection, anti-money laundering (AML), and countering terrorist financing, per Bangko Sentral ng Pilipinas (BSP) Circular No. 1154, issued on September 14.

The additional rules were released after the Monetary Board’s (MB) approval and the framework’s release for digital banks in December 2020.

Digital banks must have at least PHP1 billion in the capital.

According to the Circular, banks switching to digital banking will have three years from when the MB approves them to “meet the minimum capital requirement and implement the transition plan, including divestiture or closure of branches, sub-branches, or branch lite units.”

It stated that the transfer of the converting bank’s stock or other similar agreements is not included in the three-year timeframe during which digital banks must achieve the minimum capital requirement.

Before receiving a Certificate of Authority (COA), which is necessary for registration with the Securities and Exchange Commission (SEC), the digital banks must have the required capital.

Only six digital banks have had their activities approved by the BSP thus far, which is sufficient for the regulator to gauge the significance and necessity of this new bank categorization.

The GoTyme Bank Corporation, Maya Bank Inc., Overseas Filipino Bank (OFBank), Tonik Digital Bank Inc., UnionDigital Bank, and UNOBank, Inc. are financial institutions.

BSP Governor Felipe Medalla said in a statement on Wednesday that the institution “remains committed to ensuring that the Filipino people have access to a wide range of innovative products and services supported by solid governance framework and safe and dependable digital infrastructure.”

He argued this as the nation’s digital banking ecosystem begins to take shape.

To better absorb financial shocks and advance financial stability, Medalla claimed that “prudential standards for digital banks will increase the resilience of this new bank type.”

With the full functioning of digital banks this year, “we are happy to take a stride ahead towards a digital economy since this is believed to usher in a technology-driven and inclusive financial ecosystem that is resilient and capable of promoting a customer-centric banking experience,” he continued.

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