Another Digital Bank to Launch in the Philippines, as Government Aims to Offer Virtual Banking Services to Filipinos Working Abroad
An increasing number of transactions are being conducted online by the residents of the Philippines due to COVID-19.
The nation’s government has confirmed that it will launch a branchless bank that will offer services to Filipinos working and living abroad. The digital bank will also pilot or test the issuance of electronic receipts.
Finance Secretary Carlos G. Dominguez III noted on May 22, 2020 that the banking institution, called the Overseas Filipino Bank (OFBank), was preparing for its relaunch as a digital bank.
“Land Bank of the Philippines has made good on its commitment to have the country’s first-ever digital-only, branchless bank up and running by the end of June this year.”
It remains unclear whether the OFBank will actually be “the first” all-digital banking platform in the country. This, as the East-West Banking Corporation (EastWest), the eleventh largest bank in the Philippines with over $6 billion in assets, has also introduced its own fully-digital bank, Komo.
The company has also claimed that it’s the first universal banking group in the country to establish its own all-digital bank.
In March 2020, Tonik Financial, which was established in Singapore in 2018, confirmed that it had acquired a banking license from the Philippines’ reserve bank. The company recently revealed that it has chosen BPC as its exclusive payment partner.
These all-digital banks will be facing significant challenges. The residents of the Philippines are spread across a large territory of 7,600 separate islands, however, 70% of the nation’s population is still unbanked.
Komo, Tonik, and OFBank aim to enable greater financial inclusion by providing services to the unbanked and underbanked residents of the country.
Dominguez noted, while referring to Cecilia C. Borromeo, the president and CEO at Landbank:
“We set up this OFBank a couple of years ago. We’ve had problems with the technology but I think with Cecile’s leadership, we are almost ready to launch.”
“The OFBank, which will primarily benefit the country’s migrant workers, will use digital technology and smartphone apps to provide banking and other financial services.”
Earlier this year, the Bangko Sentral ng Pilipinas (BSP), the nation’s reserve bank, gave OFBank the green light to develop a digital onboarding system (DOBS) that leverages artificial intelligence. The DOBS may be used to perform digital know-your-customer (KYC) checks, the Department of Finance (DOF) said.
The DOF quoted Borromeo, who said that “we are on our way to making OFBank a fully digital bank by end of June.”
As noted by the Business Enquirer, Landbank had acquired the Philippine Postal Savings Bank (Postbank) in 2017. The bank was then converted to OFBank, which operates as a savings bank that focuses on serving overseas Filipino workers (OFWs).
“Overseas Filipinos with Postbank accounts who migrated to OFBank were issued EMV-enabled Visa debit cards they could use for automatic teller machine withdrawals, fund transfers, bills payments and online purchases, among others.”