Research company Fitch Solutions subsidiary BMI forecast the end of a moratorium on new electronic money issuers (EMIs) from non-banking institutions in the Philippines would positively impact operators’ revenue diversification strategies, but cautioned the benefits may be diminished by the entry of new players.

Bangko Sentral ng Pilipinas recently lifted the moratorium, which started in 2021, with the stated aim to modernise the country’s financial landscape and foster digital innovation.

In a report, BMI explained lifting the moratorium should provide operators with the rationale to expand their offerings and innovate to appeal to a wider market.

It added the move, coupled with the already-competitive local fintech market, would likely lead to lower transaction fees and more sophisticated financial services to enable operators to differentiate themselves from competitors.

The entry of new, innovative players is expected to boost price competition and spur players to offer more advanced services, offsetting transaction fees that are likely to come under threat.

BMI believes operators will be able to respond faster to the licensing system’s due diligence requirements than new entrants or banks with rudimentary digital financial service businesses.

Applicants for new banking licences need to provide market research and data-driven analysis into their business model and how it enhances the product’s value in the industry. There is also a requirement to demonstrate capital adequacy and robust risk management systems.

The central bank has issued 42 EMI non-banking financial institution licences and 27 EMI-bank licences.