The Future Of Banking: Singapore Gets Four Digital-Only Banks, Grab-Singtel And Sea Awarded Licences To Run Digital Full Banks

The Monetary Authority of Singapore (MAS), the city-state’s central bank, announced on Friday (4 December) it has granted digital full bank licences to the a consortium of Grab-Singtel and an entity fully owned by tech behemoth Sea, The Financial Times reported.

The digital full banks will not have physical presence or ATMs. All banking services will have to be provided online but they can operate like traditional banks by catering to retail customers by offering a full range of services including opening accounts, deposits as well as issuing debit and credit cards.

The new licensing regime is viewed as a radical move that is likely to reshape the contours of the banking industry.

Singapore’s banking landscape is currently dominated by three big players - DBS, OCBC and United Overseas Bank - which hold bulk of the city state’s deposits and offer some banking services via the Internet or mobile apps.

MAS also awarded Digital Wholesale Bank (DWB) licences to a consortium comprising Greenland Financial Holdings Group Co. Ltd, Linklogis Hong Kong Ltd, and Beijing Co-operative Equity Investment Fund Management Co. Ltd and an entity wholly-owned by Ant Group Co. Ltd.

Greenland Financial is the investment arm of Chinese real estate developer and state-owned enterprise Greenland Group, while Linklogis Hong Kong is a supply chain financing firm.

Digital wholesale banks can serve corporate clients and small and medium-sized enterprises.

The MAS received 21 applications, of which 14 were evaluated as eligible.

MAS said that applications were assessed on the following criteria:

• value proposition of business model, incorporating innovative use of technology to serve customer needs and reach under-served segments;

• ability to manage a prudent and sustainable digital banking business; and

• growth prospects and other contributions to Singapore’s financial centre.

Ravi Menon, Managing Director of MAS, said, “MAS applied a rigorous, merit-based process to select a strong slate of digital banks. 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. They will further strengthen Singapore’s financial sector for the digital economy of the future.”