The Philippine National Bank (PNB), one of the largest banks in the country, is reportedly considering setting up a digital bank as an independent unit or a subsidiary.

It is actively reviewing the regulatory norms to check which digital banking entity would be more beneficial.

The lender said that it has allocated at least PHP2.5bn ($51.40m) for technology upgrades in 2020.

In a virtual press conference, PNB CEO Jose Veloso said: “As we get to see the regulatory body encouraging digital bank participation, we would like to also review that and put it in a subsidiary or stand-alone.

“I understand there are going to be different regulatory reliefs (with regards to) or ease of doing business. That is something we are seriously reviewing.”

Back in June, PNB’s mobile transactions increased by 18%, and the bank reported over 830,000 online transactions as of last month registering a 142% growth.

Veloso added: “We see an upward trend in digital transaction activities. Customers have started to embrace and become more comfortable in using digital applications through their desktops and smartphones.”

The Bangko Sentral ng Pilipinas (BSP), the central bank of the country, said in its three-year digital payments transformation road map that digital banks will be regulated separately.

BSP governor Benjamin Diokno said that digital banks will not rely on physical touchpoints like traditional banks.

Diokno, however, also added that these banks will follow the same rules as the traditional banks, in terms of cybersecurity, outsourcing, consumer protection, anti-money laundering (AML) and counter-terrorism safeguards.

The BSP can issue a total of five virtual banking licences every year for five years. Later, the number of licences it can issue could be changed.

The licences are issued after examining the overall banking situation of the country, and the number of applicants looking to set up a digital bank.