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PNB considering setting up digital bank

pnb considering setting up digital bank 816x478 - PNB considering setting up digital bank

Philippine National Bank said it is studying establishing a digital bank and is actively reviewing the regulatory regime to determine whether it is more advantageous to set up an independent entity or a subsidiary.

“As we get to see the regulatory body encouraging digital bank participation, we would like to also review that and put it in a subsidiary or stand-alone. I understand there are going to be different regulatory reliefs (with regard to) or ease of doing business. That is something we’re seriously reviewing,” Jose Arnulfo A. Veloso said in a virtual press conference Friday.

PNB said it has allocated at least P2.5 billion for technology upgrades this year.

The Bangko Sentral ng Pilipinas (BSP) has said it will regulate digital banks separately in its three-year digital payments transformation road map.

BSP Governor Benjamin E. Diokno said digital banks will have zero or minimal reliance on physical touch points compared to traditional lenders.

However, he added such banks must still comply with the same standards of corporate governance and risk management required from bricks-and-mortar lenders. They include cybersecurity, outsourcing, consumer protection, anti-money laundering and counter-terrorism safeguards.

The bank reported an 18% increase in mobile transactions in June, two months after the enhanced community quarantine was imposed on much of the country. Mr. Veloso said in an e-mail its transactions over the Internet rose 142% as of the end of September, with more than 830,000 transactions.

“We see an upward trend in digital transaction activities. Customers have started to embrace and become more comfortable in using digital applications through their desktops and smartphones,” Mr. Veloso said.

Under House Bill 5913 also known as the Virtual Banking Act of 2020, the BSP can grant licenses to operate to no more than five virtual bank applicants every year for five years. The Monetary Board may then increase or decrease this limit afterwards.

Mr. Diokno said the BSP will have to examine the country’s overall banking situation and the number of applicants before they can build a digital bank.

Among current digital-only lenders in the Philippines include CIMB Bank Philippines, Inc. and ING Bank N.V.-Manila. Both are known for offering deposit rates of up to 4% annually and some lending propositions in order to encourage more users to join. — Kathryn Kristina T. Jose

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