The digital banking sector in the Philippines has recently reported a remarkable growth of 27% from September to December 2023, significantly higher than the overall banking system’s growth of 4%.
This surge in growth has elevated the total digital banking depositor base to 5.9 million as of the end of December 2023, according to the Digital Bank Association of the Philippines (DiBA PH).
Angelo Madrid, President of DiBA PH and President of Maya Bank, stated, “Digital banks are changing the game for financial inclusion in the country beyond access. This kind of growth in such a short amount of time is unprecedented in terms of onboarding the unbanked and underserved.”
The impressive growth trajectory of the digital banking sector involves the country’s six licensed digital banks: GoTyme Bank, Maya Bank, Overseas Filipino Bank, Tonik Bank, UnionDigital Bank, and UNO Digital Bank. These organizations are the founding members of DiBA PH.
Since the Bangko Sentral ng Pilipinas (BSP) introduced the digital banking category in 2021, the sector has evolved rapidly, setting the stage for all six banks to go live by 2023.
Despite their recent entry into the market, these banks have reported a near doubling of deposits from over 35 billion to 69 billion from 2022 to 2023, with gross total loan portfolio increasing from over 11 billion to nearly 25 billion for the same period.
These milestones were achieved despite considerable infrastructural challenges, including the rollout of the national ID system and limited coverage by the national credit bureau.
According to the BSP Financial Inclusion Survey for 2021, only 23% of the 56% of the adult population with financial accounts have bank accounts. The number of savers is much less, with 31% of the adults with savings putting their money in banks. Only 4% of adults with loans get their credit from banks.
Since their introduction, digital banks have transcended infrastructural limitations to significantly boost financial inclusion, offering deposit accounts and credit to populations that traditional banks have typically overlooked.
Manish Bhai, DiBA Trustee and Founder-CEO at UNO Digital Bank, stated, “This democratization of financial services is a testament to the potential of technology-driven banking solutions to foster economic empowerment and inclusivity.”
BSP Deputy Governor Chuchi Fonacier added, “The growth of digital banks highlights the sustained shift in consumer demands towards accessible, responsive, and user-friendly financial services. We are pleased with the digital banking sector’s trajectory and its rippling effect towards a larger banking trend of optimizing technology in providing financial services.”
Looking ahead, the industry’s stability is a priority, as outlined by Long Pineda, Vice President of DiBA PH and Chairperson of Tonik Digital Bank, Inc. “The next three years are pivotal for reinforcing the digital banking sector’s foundations, scaling lending operations, and solidifying confidence among investors and customers alike,” Pineda emphasized, highlighting the sector’s ambition for sustainable growth and broader financial inclusivity.
