Foreign banks mull entry into digital Islamic banking

February 6, 2025 | 12:00am

MANILA, Philippines —  Two financial institutions are interested in putting up digital Islamic banks in the Philippines, according to Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi Fonacier.

Speaking about recent developments in the Islamic banking sector during the 2025 Media Information Session in Baguio City over the weekend, Fonacier said that two major Islamic banks from Malaysia have expressed interest in venturing into digital Islamic banking.

One Islamic lender already has a subsidiary in the Philippines, while the other interested player has no presence in the country. The potential entrants were engaged during BSP’s roadshows in Malaysia last year, Fonacier said.

While Fonacier refrained from disclosing the names of the interested Islamic banking players, she emphasized that their entry could significantly boost competition and financial inclusion, especially in underserved regions such as Mindanao.

She added that the BSP and the government need to conduct more roadshows in local provinces to raise more awareness for Islamic banking and its benefits for both muslims and non-muslims.

With a current tally of three Islamic banking players in the country, Fonacier said the BSP is hoping to increase the number to at least six or seven in the next five years.

Al Amanah Islamic Bank of the state-owned Development Bank of the Philippines, Laguna-based CARD Bank Inc. and Malaysia’s Maybank are three banks offering Islamic banking in the country.

Meanwhile, Fonacier also confirmed that two separate financial institutions –unrelated to Islamic banking – have expressed interest in putting up a digital bank in the Philippines.

However, no formal applications have been submitted yet, as prospective players are still finalizing their documentary requirements.

The BSP officially lifted the moratorium on digital bank licenses last month, with four slots remaining under the current limit of 10 digital banks.

Asked whether the licenses will be awarded individually or all at once, Fonacier said the applicants must present a strong value proposition that addresses a specific market need while also introducing innovative business models.

“They must fulfill these requirements. We cannot say immediately that the two interested parties will automatically be awarded just because they were the first to submit. Our evaluation will be based on the actual proposals,” she said.