Singapore wants to become an Asian hub for digital banks

Ravi Menon. Photographer: Wei Leng Tay/Bloomberg

Singapore’s welcome mat to virtual banks is going beyond its own shores.

The island nation wants to become a regional hub for technology firms with advanced data expertise, said Ravi Menon, managing director of the Monetary Authority of Singapore. Doing so would improve banking services at home and in other parts of Southeast Asia, he said.

“Singapore wants to be a base for these players as they grow in the region,” Menon, who has led the financial regulator since 2011, said in a recent interview. “And that means anchoring them here at the early stage of their development, and allowing them access to the domestic banking market.”

Southeast Asia, where millions of people are underbanked, presents an opportunity for providers of virtual banking services, especially loans. The market for lending via digital channels is expected to more than quadruple to $110 billion by 2025, according to a report by Bain & Co., Google and Temasek Holdings Pte.

Central to the monetary authority’s fintech hub ambitions are its plans announced earlier this year to award as many as five digital banking licenses to non-banks, including three slots that are open to foreign firms. Applications are due by the end of December.

Singapore’s traditional incumbents like DBS Group Holdings Ltd., Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. already provide digital services through mobile phones and other channels. Still, more can be done by technology firms, according to Menon.

“Some of these other players use a range of other data to make very quick assessments and are able to disburse these loans in a very short space of time,” Menon said. “Those kinds of things are not met adequately or as easily, or it would require tremendous additional cost or effort on the part of traditional banks.”

Small and midsized firms in Southeast Asia are underserved by existing banks, according to the Bain-Google-Temasek report. More than 70% of adults, or about 296 million people, in the region have inadequate banking access, it found.

Menon said he expects non-financial firms to work with traditional banks through joint ventures and other combinations.

That may become a reality soon, after peer-to-peer lender Validus Capital formed a partnership with OCBC and two other firms to seek one of the digital wholesale banking licenses that’s up for grabs, Bloomberg reported this week.

“As with all competition, you will see some consolidation taking place, some creative destruction taking place,” Menon said. “What’s most important for us as policymakers is to make sure that the consumer benefits.”

Bloomberg

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.