BIZ BUZZ: The crackdown on digital banking ‘backdoor’

Gone are the days when aspiring digital bank operators can buy an existing rural or thrift bank to secure a Philippine license without having to compete for the few available slots.

The Bangko Sentral ng Pilipinas (BSP) has found less than a handful of such digital banking wannabes going through the backdoor, Deputy Governor for financial supervision Chuchi Fonacier told Biz Buzz.

One of them is Seabank Philippines Inc. of consumer internet company Sea Ltd., the group that owns e-commerce platform Shopee.

However, Fonacier quickly pointed out that Seabank has already complied with the P1-billion minimum capital required of digital banks.

In 2022, Sea group quietly bought 57-year-old Banco Laguna Inc. to enter the digital banking space after the six slots had been farmed out.

But for players other than Seabank that similarly took such route, the BSP has summoned them as part of its due process.

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“When we call out, they need to explain,” Fonacier said. “If you’re a rural bank or thrift bank but your business model is that of a digital bank, we will require you [to comply with minimum capital].”

No longer is it a gray area. Anyhow, the BSP is set to reopen the licensing of digital banks to four new players—interestingly matching the current count of backdoor players—by next year. From hereon, each player has to earn its rightful spot. Any entity that needs to comply must do so immediately, Fonacier said.

“For us, there should be no backdoor,” the regulator said.