PNB plans to establish digital bank subsidiary


The Philippine National Bank (PNB) is thinking of putting up a digital bank either as a subsidiary or stand-alone unit, according to its president and CEO Jose Arnulfo “Wick” Veloso.

PNB president and CEO Jose Arnulfo “Wick” Veloso

 “We’re discussing internally with the principals,” said Veloso. “They really want us to set up a digital bank” and a pure digital bank at that.

The Bangko Sentral ng Pilipinas (BSP) has drafted a circular for the establishment of digital banks in the country and the banking community is currently being consulted on this, including the proposal to impose a minimum capitalization of P1 billion for a digital banking license.

 “Clearly, as we get to see more regulations (or) the regulatory body encouraging digital bank participation, we would like to also review that and probably put into a subsidiary or stand alone,” said Veloso. “I understand there is going to be different regulatory relief or ease of doing business for those that are going to set up purely digital banks. That is something that we are seriously reviewing.”

Veloso, in a virtual press briefing on Friday, said that in the digital banking landscape as it is currently set up now, PNB is one of the leaders in the digital experience and since March when the lockdowns were implemented, the bank has been trying to convince clients to go digital.

 “Others claim to be ahead of space in the digital world. I can proudly say that the only thing they are ahead of us are  — for one bank, the end-to-end account opening, and for another bank, it’s because of the end-to-end check deposit. But otherwise, there is no dfference with what they’re sharing with everyone else,” said Veloso.

The bank has seen an increase of 18 percent in its digital and mobile transactions during the height of the pandemic lockdowns. As of end-September, they now have 696,000 users of their digital platforms, up 31 percent year-on-year.

 “We want our customers to understand how they can easily manage their funds and transact by going online using our digital channels. We also want more people to learn about the products that are meant to fit all their needs (with digital banking experience),” said Veloso. Presently, PNB branches across the country are “reaching out to customers who have not yet registered with internet banking or mobile banking”.

In the BSP proposed circular on digital banks, any existing banks applying to shift to digital banking are given three years to complete conversions including the closure of branches or branch lite units.

The BSP said a digital bank will be confined to a digital platform and/or electronic channels “with minimal to no reliance” on physical touchpoints. It will not have a branch or branch-lite unit but it can offer offer financial products and services through cash agents and other delivery partners. However it will be required to keep a head office in the Philippines as its main point of contact and as a “central hub for receiving and resolving customer complaints.”

There are three banks that are already applying to deliver digitized financial services but these applications are not digital bank applications but are applying under existing BSP banking classification, pending the digital banking regulation.

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