A total of 21 applications have been submitted for up to five digital bank licences, which could open up more choices for companies and retail customers and change the face of banking here.
Of these, seven bids were submitted for up to two full bank licences that can serve both retail and corporate customers, while 14 applications were made for up to three wholesale bank licences that are limited to non-retail clients.
Applications for the digital bank licences closed on Dec 31 last year.
The Monetary Authority of Singapore (MAS) said yesterday that the licences "attracted strong interest from a diverse group of applicants", noting that these included e-commerce companies, technology and telecommunications firms, financial tech firms and financial institutions.
"The majority of applicants are consortia, with entities seeking to combine their individual strengths to enhance the digital bank's value proposition," MAS said.
Four of the seven applicants for the digital full bank licences have made their applications public.
Internet company Sea, which owns e-commerce firm Shopee and gaming developer Garena, announced its bid yesterday.
It is the first known company to be going it alone, and says it will target millennials and small and medium-sized enterprises.
Other groups which previously announced their applications are a tie-up between ride-hailing firm Grab and local telco Singtel; a consortium led by gaming company Razer; and Beyond, a six-member team led by Osim founder Ron Sim's V3 Group and stored-value card operator EZ-Link.
Beyond also includes the Singapore Business Federation, Temasek unit Heliconia Capital, property giant Far East Organization and insurer Mitsui Sumitomo Insurance.
Applicants for full bank licences have to be Singapore-based and controlled by Singaporeans.
The National University of Singapore Business School's Associate Professor Lawrence Loh said the lower cost base of the digital banks - they will not need a physical presence - means they will be able to pass on cost savings to customers.
Small firms with cross-border dealings and large banking costs are also likely to be big winners in this new landscape, said EY global emerging markets fintech leader Varun Mittal.
Given that 14 of the 21 applications are for wholesale banking licences, this is the segment that most applicants are eyeing.
Mr Mittal pointed out that the entry of digital-only banks elsewhere had forced incumbents to change their ways and cut certain fees.
He expected a similar knock-on effect here. "Benefits from (the entry) of digital-only banks will be seen from the get-go, like in Hong Kong. Singapore banks will ramp up their services and we will see them become more agile," he added.
Mr Mittal said that while innovation is important, MAS will likely decide the winners of the digital bank race based on whether they can run a sustainable business.
Of the 14 applicants for the wholesale bank licence, most of the five known contenders comprise partnerships between foreign and local firms. Digital wholesale bank applicants can be majority-owned by foreign entities.
Consortia headlined by Hong Kong financial services provider AMTD Group, Chinese billionaire Jack Ma's Ant Financial and supply chain finance company Sheng Ye Capital have thrown their hats into the ring.
"These are established names which should not face issues in gaining customers' trust," said Prof Loh.
His sentiments were shared by Mr Mittal, who said: "Customer behaviour has evolved over time and consumers will be willing to give digital banks a try."