GCash May Enter the Digital Bank Race in the Philippines

GCash, the Philippines' top e-wallet provider, is considering entering the digital banking industry. According to Martha Sazon, CEO of GCash, the firm is contemplating applying for a digital bank license after the Bangko Sentral ng Pilipinas (BSP) declaration to remove its moratorium on new digital banking licenses beginning January 1, 2025.

This decision by the BSP allows for up to 10 digital banks to operate in the nation. While GCash is considering this move, Sazon said, “Nothing is definite at the moment.” Six digital banks have been founded in the Philippines since the Digital Banking Framework was implemented in December 2020. These include Tonik, Maya Bank, OFBank, UNObank, UnionDigital Bank, and GoTyme Bank.

With the embargo lifted, four more licenses will become available, providing chances for both new applicants and incumbent institutions eager to transition to digital banking. Given the growing interest in digital banking, GCash's prospective entry into this space is not unexpected. It would also follow in the footsteps of its rival, Maya. Known initially as PayMaya, Maya shifted from an e-wallet to a digital banking license before opening Maya Bank in April 2022. Since then, Maya Bank has garnered over 3 million customers and was recently included in Forbes' 2024 list of the World's Best Banks.

In recent developments, GCash received substantial fresh investments from Ayala Corporation and Mitsubishi UFJ Financial Group (MUFG), raising its worth to an astonishing US$5 billion. The total investment of US$800 million, which includes secondary and primary finance, is one of the biggest fintech investments in the Philippines to date. Ayala's subsidiary AC Ventures Holdings, Inc. (ACV) will acquire an additional 8% of GCash's parent firm, Mynt. Similarly, after binding agreements, MUFG Bank, Ltd. will purchase an 8% share in Mynt.

Sazon said that these funds would be used largely to boost GCash's lending business, which has already seen tremendous growth. GCash has disbursed PHP 155 billion in loans, representing a 73% year-over-year increase. The organization today serves 5.4 million borrowers, a figure that has increased by more than 70% in the last year. GLoan, a quick and simple loan solution that enables consumers to borrow up to PHP 125,000, is the driving force behind GCash's lending services. GCash differentiates itself from conventional banks by focusing on satisfying Filipinos' daily, small-scale financial requirements.

In addition to loans, GCash intends to expand its core payment services and pursue worldwide development. GCash now operates in 17 countries, with plans to expand its reach to the Filipino diaspora.

When questioned about the likelihood of an initial public offering (IPO), Sazon responded that, although an IPO is always an option, the company's primary emphasis is on long-term commercial development. She said that GCash is actively watching market circumstances before making final choices on a public offering, but no specifics on the IPO structure were disclosed.

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