MANILA -- The Philippine central bank has awarded two more digital banking licenses, as Southeast Asia steps up its foray into fintech.
Sequoia India-backed Tonik Digital Bank and Singapore-based UNObank have secured licenses, Philippine central bank Gov. Benjamin Diokno announced on Tuesday. They join state-backed Overseas Filipino Bank, which got a license in March.
The Philippines' latest move comes as the COVID-19 pandemic accelerates the region's embrace of digital financial services. Malaysia plans to hand out digital banking licenses next year, while Singapore awarded has already awarded four. Elsewhere in Asia, Hong Kong has granted eight virtual banking licenses.
The three digital banks in the Philippines are set to compete with the country's traditional, well-entrenched lenders, which are plotting their own digital push. The prize is a market of around 110 million people, where two-thirds of the population has no bank account. The country, moreover, has recorded a surge in the volume and value of digital transactions amid the coronavirus pandemic.
"Securing a digital banking license is one of this year's anticipated milestones for us," said Tonik CEO and founder Greg Krasnov said in a statement. "This will help us further strengthen our foothold in the neobanking space through accelerating the roll out of our additional lending and payment products."
Tonik has raised $44 million in funding and launched its services in March under its previously acquired rural banking license. The company says it has secured over 1 billion pesos (around $20 million) in retail deposits in less than a month.
UNObank is run by Singapore-based DigibankAsia, which has partnered with digital banking technology provider Mambu and Amazon Web Services.
UNObank still has to comply with other requirements, central bank Deputy Gov. Chuchi Fonacier told Nikkei Asia. "So probably, UNO Bank can launch its digital banking service next year," Fonacier said.
UNObank co-founder Manish Bali said: "Long term, our goal is to bridge the gap to financial inclusion. With UNObank, we are building the first full-spectrum digital bank to service those with unmet financial needs in Southeast and South Asia."
The Philippine central bank introduced the "digital bank" category last year as part of efforts to bring more people into the formal financial system. It intends to issue five licenses initially.
Digital banking licenses are awarded to banks without physical branches, and they must have a capitalization of at least 1 billion pesos.
Several other companies are eyeing digital bank licenses, including South African fintech Tyme, which has partnered with Philippine conglomerate JG Summit Holdings, for its Philippine rollout.
In an interview with Nikkei Asia last week, Gov. Diokno said he wanted half of the country's financial transactions to be digital and 70% of Filipino adults to have formal financial accounts by the time he steps down in 2023.
"But this pandemic has been a major catalyst for that target. We'll probably meet that target by the end of 2022, sooner rather than later," he said.