Grab-Singtel, Sea, Ant, Greenland-consortium land Singapore digital bank licences

The Monetary Authority of Singapore (MAS) announced late Friday the long-awaited winners of the city-state’s digital bank licences.

A Grab-Singtel tie-up and Sea Ltd have received permits to form digital full banks, while Ant Group and a Greenland Financial consortium landed digital wholesale bank licences. The consortium led by Greenland Financial, which is the investment arm of state-owned Chinese real estate developer Greenland Group, included Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management.

Full digital banks will be able to cater to all kinds of consumers. MAS requires them to be locally owned and meet the minimum paid-up capital of S$1.5 billion within three to five years’ time from commencement of business.

Foreign firms can hold a majority stake in digital wholesale banks and the paid-up capital requirement is significantly lower at S$100 million.

MAS said the criteria for landing a licence included the value proposition of the business model, the use of innovative technology to reach underserved segments, the ability to manage a prudent and sustainable business and growth prospects.

The central bank added it also looked at the impact of the COVID-19 pandemic on assumptions used in financial projections.

“MAS applied a rigorous, merit-based process to select a strong slate of digital banks,” Ravi Menon, managing director of MAS, said in a statement posted on the central bank’s website. “We expect them to thrive alongside the incumbent banks and raise the industry’s bar in delivering quality financial services, particularly for currently underserved businesses and individuals,” he added.

MAS is providing in-principle approval, with the licence winners expected to start operations in early 2022.

The successful bidders for the licences are obliged to serve the so-called “underbanked” in Singapore — the youth, and small-to-medium enterprises (SMEs), which lack access to financing. The winners are also generally expected to use the licence as a stepping stone to regional expansion.

Ant Group pointed to its accumulated experience in setting up digital financial services, particularly in China, where it works with financial institutions to serve SMEs.

“As a leading provider of technology-driven inclusive financial services, our mission is to make it easy to do business anywhere through innovative technology,” Ant Group said in a statement.

Regional ride-hailing super app Grab and telecom Singtel pointed to their expertise with both technology and serving consumers.

Anthony Tan, group CEO and co-founder of Grab, said in a statement: “With Grab and Singtel’s combined experience in meeting the everyday needs of Singaporeans… the digital bank will further our goal to empower more people to gain better control of their money and achieve better economic outcomes for themselves, their businesses and families.”

Sea Ltd. said Friday its digital bank would draw on insights from its users across all three of its platforms. “As a proudly homegrown company, we look forward to further contributing to the long-term development of our nation’s digital economy, creating more employment opportunities in Singapore, and empowering our whole community to thrive in the digital era,” Forrest Li, chairman and CEO of Sea, said in a statement.

Greenland Financial, in a statement posted to WeChat in Chinese on Saturday, said it would form a digital bank called GLL Bank which would be “introducing China’s cutting-edge fintech and experience in serving China’s SMEs to Singapore.”

The Chinese company’s main businesses include equity and bond investments, fintech, asset management and investing in financial institutions. For 2019, it posted net profit of nearly 3.1 billion yuan, or around $474.6 million, with around 40.1 billion yuan in assets under management, according to its website.

Razer loses out

A consortium led by Hong Kong-listed gaming hardware maker Razer’s fintech arm Razer Fintech, which was a closely-watched applicant, didn’t make the final cut.

The consortium which had pitched the Razer Youth Bank included Sheng Siong Holdings, FWD, Linksure Global, Insignia Ventures Partners and Carro.

Razer Fintech’s CEO Lee Li Meng said that it still intended to roll out Razer Youth Bank in markets where it already had a strong user base, such as in Malaysia and the Philippines, or in Europe, the Middle East or Latin America. “While awaiting the results of the Singapore licence, we have already been engaging other jurisdictions in parallel,” Lee said in a statement.

A nascent but growing market

While the digital banks may begin operating in Singapore, the market is relatively small, and licence winners are widely expected to take their operations regional. However, it’s a growing market.

For January-September period, Singapore saw monthly active user growth of 17 per cent for mobile banking apps as the pandemic pushed more people to use digital financial services, according to the 2020 e-Conomy SEA report from Google, Temasek and Bain & Co.

Other digital financial services also gained increased adoption amid the pandemic, the report said. The frequency of e-wallet transactions rose to 25 per cent on average, to 18 per cent before the pandemic, while digital remittances nearly doubled amid movement restrictions, the data showed.

The 2019 e-Conomy report had noted that four in 10 of adults in Singapore were underbanked or do not have access to the full suite of financial services such as credit cards or investment products. But around 98 per cent of adults 25 or older in Singapore have a bank account.

The five largest ASEAN economies — Singapore, Malaysia, Indonesia, the Philippines and Thailand — have agreed to liberalise the regional banking sector, but it’s unclear when that might materialise.

In Malaysia and Thailand, nearly half of the adult population is underbanked. The unbanked — people who do not even have a bank account — were 15 per cent, and 18 per cent in Malaysia and Thailand respectively.

In Indonesia, half of the adult population is unbanked, while about a quarter is underbanked. In the Philippines and Vietnam, nearly 70 per cent did not have a bank account at all.

Under the ASEAN Banking Integration Framework, high-quality banks in association countries would be given access to other regional markets on the same footing as local banks. In 2017, Indonesia’s Bank Mandiri became the first bank to be granted the Qualified ASEAN Bank (QAB) status in Malaysia. At least two Malaysian banks are operating in Indonesia as QABs.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.