Monday, May 27, 2024

PH digital banks received over $700-M investments, new group says

A newly organized organization of digital banks in the Philippines said global and local investors have poured over $700 million into the digital banking sector, setting a new milestone that underscores the industry’s robust growth and its potential to reshape the digital financial landscape. 

In a sign of investor confidence, digital banks have attracted substantial capital since 2021 and are now showcasing extraordinary growth, with depositor numbers reaching 5.9 million at the end of 2023 alone. 

The surge in depositor numbers accompanied a remarkable increase in deposits, from over P35 billion at the end of 2022 to P69 billion at the end of 2023, and a significant rise in gross total loan portfolio from over P11 billion to nearly P25 billion for the same period.

“The significant and continued investment in the digital banking industry sector is a strong vote of confidence in its ability to stimulate economic growth, create jobs, and broaden access to savings and credit,” said Angelo Madrid, president of the Digital Bank Association of the Philippines (DiBA PH) and president at Maya Bank. 

Madrid added that as digital banks navigate the path to profitability while accelerating financial inclusion, strategic investments and capital play a crucial role. The global digital banking industry norm shows a five to seven-year trajectory to break even.  

“We see this as more than a financial endorsement from the global and local investment communities; it’s a recognition of the sector’s potential to drive economic inclusivity and innovation, setting a new standard for the future of banking in the Philippines,” said Henry Aguda, trustee at DiBA PH and president and CEO at UnionDigital Bank.

Digital banks are showing growth potential in addressing key gaps in the national financial infrastructure and overcoming challenges such as the slow rollout of the national ID system and limited coverage of the national credit bureau. 

Despite these obstacles, their digital-first innovative approaches have significantly widened access to deposit accounts and credit, showcasing the transformative power of digital banking.

In 2021, the BSP created a new digital banking category to bolster financial services in the country and capped the entrants to six banks. In an unprecedented timeframe for the banking industry, the digital banks established their operations and were all live by 2023. 

There are six BSP-licensed digital banks in the Philippines: GoTyme Bank, Maya Bank, Overseas Filipino Bank (OF Bank), Tonik Digital Bank, UnionDigital Bank, and UNO Digital Bank. In 2022, the banks self-organized DiBA PH, in a move to promote digital banking as a vehicle for greater financial inclusion.

GoTyme Bank is backed by the Tyme Group and the Gokongwei Group, while Maya Bank’s investors include KKR, PLDT, Tencent, IFC, SIG Ventures, EDBI, and First Pacific. OF Bank operates with backing from Landbank of the Philippines. Tonik Bank’s funding sources comprise Mizuho Bank, Sequoia India, Point72 Ventures, and Insignia Venture Partners. UnionDigital Bank, a subsidiary of UnionBank, leverages its parent company’s support within the Aboitiz Group, and UNO Digital Bank is financed by Creador Private Equity and Gateway Partners.

“All our members have credible investors who are committed to growing the Philippine market in the long run. We all look forward to growing the industry as we stabilize the sector and scale up our various initiatives, including credit,” said Nate Clarke, Trustee of DiBA PH and president and CEO at GoTyme Bank.

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