BSP reopens digital-bank licensing as deposits surge past ₱120bn

MANILA — For four years the Bangko Sentral ng Pilipinas kept the door bolted. On Wednesday it cracked it open. The central bank confirmed it will accept applications for a fifth and sixth digital-banking licence beginning in the third quarter, ending a moratorium imposed in 2021 when six purely digital lenders were first cleared to operate.

The timing is no accident. Aggregate deposits at the country's licensed digital banks crossed ₱120bn in the first quarter, up from roughly ₱74bn a year earlier, according to figures the regulator released alongside the announcement. Active accounts now number above 11 million in a country where, by the BSP's own count, two in five adults still lack a formal bank relationship.

What looked like a cautious experiment has become a genuine deposit channel — and the central bank, having watched the cohort mature, now wants more competition on terms it controls more tightly than before.

What the new rules demand

The reopened window comes with sharper edges. Minimum capital for a new digital bank rises to ₱1.2bn from the ₱1bn floor set in 2020, and applicants must now show a credible path to profitability within five years rather than the looser horizon the first cohort enjoyed. The BSP is also requiring that at least 40 per cent of a new bank's loan book be directed to retail and micro-enterprise borrowers within three years of launch.

Officials framed the changes as lessons learned. Three of the original six digital banks remained loss-making at the end of 2025, weighed down by aggressive customer-acquisition spending and souring unsecured consumer loans. The regulator has watched non-performing loan ratios at one challenger climb above 8 per cent, well over the industry average for traditional banks.

We are not trying to crown winners. We are trying to widen the field while making sure the next entrants are built to last, said a senior BSP supervision official who requested anonymity because the policy details are not yet final.

Who is circling the licence

Interest is already audible. Two conglomerate-backed groups have signalled intent to apply, including a payments venture spun out of a major Manila retail empire and a remittance-focused fintech that has spent two years building a lending arm on the back of overseas-worker transfers. A Singapore-headquartered super-app is also understood to be weighing a Philippine entry through a local joint venture, according to two people briefed on its plans.

The remittance angle is the one bankers keep returning to. Overseas Filipino workers sent home roughly $38bn last year, and the fees on that flow remain stubbornly high. A digital bank that could attach deposits and credit to remittance corridors would, in theory, monetise a relationship the incumbents have largely failed to deepen beyond the cash-out window.

Maria Concepcion Valdez, who runs a fintech advisory practice in Makati, said the economics only work for entrants with an existing distribution moat. The standalone neobank model has been brutal here, she said. The ones who survive will be the ones who already own a captive flow — payroll, remittances, a marketplace — and bolt banking onto it rather than starting cold.

The competition the incumbents fear

The reopening lands at an awkward moment for the established six. Their cost of funds has crept up as they raised deposit rates to defend balances, with one offering as much as 6.5 per cent on tiered savings — a level that pressures margins when prime lending yields sit only a few points higher. A fresh entrant willing to subsidise rates to buy market share could reignite a war the first cohort had only recently called a truce in.

Traditional lenders, meanwhile, are watching from a distance that grows less comfortable each quarter. Several of the largest universal banks now run their own digital arms, and at least one has lobbied the BSP privately to slow the pace of new licensing, arguing that the market cannot yet absorb more subsidised competition without eroding system-wide credit discipline.

Whether the central bank ultimately issues one new licence or two will signal how far it trusts the model it once paused. For now, the application desk is open, the capital bar is higher, and a market that the regulator spent four years watching warily is about to get a good deal more crowded.