Central bank issues license to country’s first digital-only bank

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A bank teller in Manila counts Philippine peso currency on November 17, 2008. Remittances sent home by overseas Filipino workers grew 16.9 percent year on year in September despite earlier fears the global financial crisis could see a decline, the central bank said November 17. AFP PHOTO/ROMEO GACAD (Photo credit should read ROMEO GACAD/AFP via Getty Images)

The Overseas Filipino Bank (OFBank) has officially become the first branchless digital-only bank in the country’s history after securing a digital banking license from the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP).

A wholly-owned subsidiary of the Land Bank of the Philippines (LandBank), the OFBank was able to commence its banking operations in June last year using its then existing license to operate as a thrift bank.

The MB issued the OFBank’s digital banking license last March 25.

Finance Secretary Carlos Dominguez 3rd said “this milestone in the country’s banking history not only fulfills President Rodrigo Duterte’s campaign pledge to create a bank that caters to overseas Filipinos, but will also help the Philippines leapfrog to the digital economy.”

“When President Duterte said he would create a bank that would serve overseas-based Filipinos, he wanted a bank that would be trailblazer in terms of modernizing and expanding the scope of the services it offers to them,” Dominguez said.

“I commend the OFBank and the LandBank under its President-CEO Cecilia Borromeo for their tireless efforts that have led to the bank’s transformation into the Philippines first branchless and digital-only banking institution,” he added.

The OFBank was created under Executive Order (EO) No. 44 that was signed by Duterte in September 2017.

To fulfill the EO’s provision on the  “need to establish a policy bank dedicated to provide financial products and services tailored to the requirements of overseas Filipinos (OFs), the Philippine Postal Savings Bank (PPSB) was acquired by LandBank and converted into the OFBank.

On June 29 last year, the OFBank was launched virtually amid the Covid-19 pandemic as the Philippines’ first branchless and digital-centric  government bank.

While fine-tuning its operations, systems and processes to enable its official transition into a digital bank, the OFBank operated as a thrift bank.

In December 2020, the BSP issued Circular No. 1105 on The Guidelines on the Establishment of Digital Banks, clearing the way for the OFBank to apply for a license as a digital bank.

On January 20, 2021, the OFBank submitted a Letter of Intent to the Supervisory and Policy Research Department of the BSP signifying its interest to be a duly licensed Digital Bank and followed it up with an application last Feb. 1 for the conversion of  its thrift bank license into a digital bank license.

The OFBank offers four digital products and services that includes a Digital Onboarding System with Artificial Intelligence (DOBSAI), which allows the real-time opening of a mobile banking deposit account on supported iPhone or Android devices.

As of December 2020, a total of 19,887 DOBSAI accounts in the OFBank have been opened with an outstanding  balance of P104.37 million.

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