Tan-led Philippine National Bank (PNB) has announced the conversion of its thrift banking unit into a digital bank.

The lender disclosed on Wednesday that its board of directors “approved and confirmed the conversion of Allied Integrated Holdings Inc. (formerly PNB Savings Bank) into a digital bank.”

The conversion is also subject to regulatory and other necessary approvals, according to the disclosure. PNB did not offer any additional details.

PNB President and Chief Executive Officer Wick Veloso has said that the bank is focused on exploring new opportunities, notably in the digital arena, that would translate to new revenue streams while limiting the risks associated with operating in the new normal.

The Bangko Sentral ng Pilipinas released Circular 1105 or The Guidelines on the Establishment of Digital Banks in December of last year, paving the way for interested parties to apply for a digital bank license.

Existing banks, such as PNB, may apply for conversion to a digital bank under the guidelines, and will have three years from the Monetary Board’s approval to meet the minimum capital requirement and implement the transition plan, which may include divestment or closure of branches or branch lite units.

Digital banks must offer end-to-end financial products and services via a digital platform and/or electronic channels, with no physical branch/subbranch or branch-lite unit supplying financial products and services. A minimum capitalization of P1 billion is required.

Regulators have put in place prudential standards for them as well. Governance and risk management, notably in the areas of information technology and cybersecurity; outsourcing; consumer protection; and anti-money laundering and counter-terrorist funding, as defined by existing rules, are among them.

They must keep a principal/head office in the Philippines to serve as the primary point of contact for stakeholders such as the central bank and other authorities.