A handful of fintech companies in Singapore may soon turn into digital banks as the city-state kicks off an application process wherein five new digital bank licences will be doled out.
According to a statement by the Monetary Authority of Singapore (MAS), applications officially opened today and will close at the end of this year (December 31, 2019).
The names of selected companies will be announced in mid-2020, and will be expected to begin operations in mid-2021.
This follows an earlier June announcement by MAS’s senior minister and chairman, Tharman Shanmugaratnam, wherein he had indicated plans to issue up to two “digital full bank” licenses and three “digital wholesale bank” licenses in the city state.
The MAS has defined “digital full banks” as lenders permitted to serve retail and non-retail customers, while “digital wholesale banks” are referred to those serving SME and non-retail segments.
The Singaporean central bank added that these digital bank licences will “ensure that Singapore’s banking sector will continue to be resilient, competitive and vibrant”.
The moves are arriving a little late for the wealthy Asian city-state – at least when compared to markets like Hong Kong, India, South Korea and parts of Europe. Hong Kong in particular, has ramped up the issuance of its virtual banking licenses in the recent months, doling them out to sub-units of Chinese tech giants like Alibaba, Ping An and Xiaomi.
Digital banks will also inevitably give the traditional banks like the Development Bank of Singapore (DBS) and United Overseas Bank (UOB) a little extra competition in Singapore. Both Asian banking giants have operated in Singapore for decades, and continue to be the biggest players in Singapore and regionally.
Meanwhile, several non-bank players in Singapore have already evinced their interest. These include prominent names such as ride-hailing superapps like Grab and gaming hardware manufacturer Razer, and fintech player Vertex Ventures-backed Validus Capital.
The MAS said it will assess these applications across a range of characteristics – including the use of innovative technology, and a sound understanding of managing risk, regulatory compliance and lending. These digital banks should be controlled by Singaporeans, and be anchored in Singapore.