For much of the last decade, digital banks were celebrated for one thing: speed. Speed in signing up customers, speed in raising deposits, speed in rolling out apps that promised to make banking as easy as tapping a screen.
Today, that story is changing.
Digital banks in the Philippines have entered a more demanding phase — one where scale alone is no longer enough. As regulators sharpen their focus on stability and sustainability, and as customers grow more selective, digital banking is being judged not just on growth, but on whether it can build durable financial habits and viable business models.
Yet even as scrutiny intensifies, the Bangko Sentral ng Pilipinas (BSP) is preparing to open the door to new players, signaling confidence that digital banking still has a bigger role to play in the country’s financial future.
A young sector with measurable impact
Since the BSP began issuing digital banking licenses, six players have taken center stage: UNO Digital Bank, UnionDigital Bank, GoTyme Bank, Tonik Digital Bank, Maya Bank, and Overseas Filipino Bank. Collectively, they now serve 20.4 million customers and hold ₱119.5 billion in deposits as of September 2025, according to BSP data.
That footprint remains small compared with universal and commercial banks, but their influence has been outsized — particularly in how Filipinos save and manage money.
Digital banks have leaned heavily on behavioral design rather than physical branches. Features such as goal-based savings “buckets,” automated deposit nudges, and visual progress trackers have turned abstract financial goals into something measurable and motivating. For many users — especially those with irregular incomes — saving is no longer a once-a-month chore but a daily habit built into an app.
Industry surveys and BSP-backed studies show that these tools are helping more Filipinos meet savings targets they previously struggled to reach. In practical terms, this means emergency funds built faster, remittance money managed more deliberately, and first-time savers drawn into the formal financial system.
In a country where traditional branches remain unevenly distributed and financial literacy is still uneven, that behavioral shift matters.
The end of “growth at all costs”
But the early phase of digital banking was driven by incentives: high-interest deposits, cash rewards, and frictionless onboarding. That playbook delivered users quickly — but it also raised costs.
As competition intensified, not only among digital banks but also from traditional lenders that upgraded their mobile platforms, the easy wins disappeared. Customer acquisition costs rose. Deposit rates became harder to sustain. Lending — once seen as the path to higher margins — introduced credit risk and provisioning pressures.
Technology, often touted as the cost advantage of digital banks, proved expensive in its own right. Core banking systems, cybersecurity, cloud infrastructure, and compliance tools require constant upgrades.
Regulatory requirements — capital adequacy, anti-money laundering controls, and reporting — mirror those of traditional banks.
The result: digital banks are now being evaluated on unit economics — how much it costs to acquire and serve each customer versus how much revenue that customer generates. Growth is still relevant, but profitability and resilience have taken center stage.
Larger, well-capitalized players are better positioned to absorb losses while refining their models. Smaller banks face tougher trade-offs, with limited scale and thinner capital buffers. This has fueled speculation that consolidation—through partnerships, mergers, or acquisitions—may eventually follow.
A regulator’s balancing act
For the BSP, the message has been consistent: innovation must not come at the expense of stability. Digital banks are expected to meet the same prudential standards as traditional institutions. Licenses are not a free pass to experiment recklessly.
And yet, the central bank is preparing to expand the field.
After lifting a three-year moratorium, the BSP reopened applications for digital banking licenses in 2025. Now, it is reviewing submissions for four new slots — a move that could reshape competition in the sector.
“We have to look at them and see the most promising business models that can actually provide value and greater services to the Philippines,” BSP Deputy Governor Lyn Javier said, noting that candidates would be shortlisted and recommended to the Monetary Board within the first quarter of the year.
Applicants must meet a P1-billion minimum capital requirement and demonstrate a unique value proposition — either through innovative business models or services not already offered by existing digital banks.
The BSP has received three applications so far and has not disclosed whether any are foreign-owned.
Ratings agency Fitch has cautioned that new entrants are likely to compete aggressively for deposits, potentially intensifying funding pressures. Still, it expects the near-term impact on the broader banking system to remain modest, as digital banks will continue to represent a small share of industry assets.
Why expansion still makes sense
At first glance, inviting more players into a sector already under pressure may seem counterintuitive. But from the BSP’s perspective, digital banks remain a tool for financial inclusion — particularly for populations underserved by brick-and-mortar branches.
Digital banks align closely with Filipino realities: irregular incomes, heavy reliance on remittances, and limited access to physical banking in rural areas. By lowering barriers to saving and simplifying money management, they help bring more households into formal finance.
The challenge now is ensuring that inclusion does not rely solely on promotional rates and short-term incentives. Sustainability will depend on deeper customer engagement—cross-selling into loans, insurance, and investments—and on integrating financial education into digital platforms.
From disruption to discipline
The Philippine digital banking story is no longer just about disruption. It is about discipline — discipline in costs, discipline in risk management, and discipline in building customers who use banks not only to park money, but to grow it.
The six licensed digital banks have shown that technology can reshape saving habits and expand access. The BSP’s decision to consider four more licenses suggests it believes the experiment is worth extending — but under tighter rules and higher expectations.
What comes next will determine whether digital banks remain niche innovators or mature into durable pillars of the financial system.
The era of easy growth is over. The era of proving value has begun.
