The Philippines’ six digital banks reported massive growth in 2023, outperforming traditional banking institutions in expanding access to financial services.
Data showed that from September to December 2023, the digital banking sector experienced a 27-percent growth in their depositor base, faster than the overall banking system’s growth of 4 percent.
This elevated the total digital banking depositor base to 5.9 million as of end-2023.
“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,” said Angelo Madrid, president of the Digital Bank Association of the Philippines (DiBA PH) and president of Maya Bank.
The outstanding growth involves the country’s only six licensed digital banks including GoTyme Bank, Maya Bank, Overseas Filipino Bank, Tonik Bank, UnionDigital Bank and UNO Digital Bank. These organizations are the founding members of the industry association DiBA PH.
The group said that 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 reported a near doubling of deposits from over P35 billion to P69 billion between 2022 and 2023, with gross total loan portfolio increasing from over P11 billion to nearly P25 billion in the same period.
These milestones were achieved despite infrastructural challenges, including the rollout of the national ID system and limited coverage by the national credit bureau.
Results of the BSP Financial Inclusion Survey for 2021 showed that only 23 percent of the 56 percent of the adult population with financial accounts have bank accounts. The number of savers is much less with 31 percent of the adults with savings putting their money in banks. Only 4 percent of adults with loans get their credit from banks.
Digital banks have transcended infrastructural limitations to boost financial inclusion, offering deposit accounts and credit to populations that traditional banks have typically overlooked.
“This democratization of financial services is a testament to the potential of technology-driven banking solutions to foster economic empowerment and inclusivity,” said Manish Bhai, DiBA trustee and founder-CEO at UNO Digital Bank.
“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. We now keenly anticipate the next wave of innovative and bespoke services that will address the needs of the banking public,” said BSP Deputy Governor Chuchi Fonacier.
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 said.