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March 01, 2024

BSP says digital banks to expand access of MSMEs to credit

Digital banks are seen supporting economic recovery from the COVID-19 pandemic by enhancing access of micro, small, and medium enterprises (MSMEs) to financing, according to the Bangko Sentral ng Pilipinas (BSP).

“By offering convenient and affordable financial products tailored to the needs of MSMEs, digital banks can accelerate financial inclusion in the country,” Diokno said.

Digital banks, unlike brick and mortar banks, have no physical branches. Their financial products and services are processed end-to-end through a digital platform or electronic channel.

Aside from offering traditional savings and time deposit accounts, digital banks are also seen to improve MSMEs’ access to credit through mobile-friendly lending and investment facilities.

In addition, digital records of sales and payment transactions can be used in assessing the creditworthiness of MSME borrowers.

Under its Digital Payments Transformation Roadmap, the BSP aims to digitalize at least half of financial transactions in the country and onboard at least 70 percent of Filipino adults into the formal financial system by 2023.

The Monetary Board approved six digital bank applications in 2021, namely: UNO Digital Bank headed by banker Manish Bhai, UnionDigital Bank of UnionBank led by bankero Edwin Bautista, GoTyme headed by bankero Jojo Malolos, PLDT’s Maya Bank headed by bankero Angelo Madrid, Landbank’s Overseas Filipino (OF) Bank led by bankero Leila Martin, and Tonik Bank of bankero Long Pineda.

OF Bank and Tonik Bank, which converted their existing banking licenses to digital banking, have reportedly onboarded 120,000 new deposit accounts as of end-September last year.

Meanwhile, UNO Digital Bank, Aboitiz-led UnionDigital Bank, GoTyme, and Maya Bank are expected to begin operations this year.

“The BSP remains committed to fostering a regulatory environment that is supportive of financial innovations, while promoting healthy competition in the financial system,” Diokno added.


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