The next Taobao or Amazon might not come out of a garage or student dormitory, but from Singapore's financial district.
Finance Minister Heng Swee Keat said yesterday that local banks will soon be allowed to operate or acquire major stakes in digital platforms matching buyers and sellers and businesses involved in the online sale of consumer goods and services.
He told the Association of Banks in Singapore's (ABS) annual dinner that making it easier for banks to conduct or invest in non-financial businesses that are related or complementary to their core financial businesses would help them to compete more effectively with new, non-bank technology players that offer "a seamless transactional experience in the sale as well as payment of consumer goods".
The rule tweak is a significant concession in the regulatory framework separating banks' financial and non-financial businesses that was introduced in 2001 to ensure that banks remain focused on their core businesses and competencies.
However, banks will continue to be barred from entering certain businesses such as property development and the provision of hotel and resort facilities.
The Monetary Authority of Singapore (MAS) move dovetailed with an ABS announcement yesterday of a new fund transfer system to allow banking customers to send money to one another using just the recipient's mobile or NRIC number.
Customers of seven banks participating in the PayNow service system can register for the service from 8am on July 10.
BANKS PARTICIPATING IN PAYNOW SERVICE
United Overseas Bank
Standard Chartered Bank
NOTE: From July 10
Mr Heng said these moves will help position Singapore's financial sector for a tech-driven future.
"The advent of mobile apps and e-commerce platforms have disrupted traditional business models and transformed consumer preferences," he noted. "Technology is also transforming financial services and the way banking customers consume these services."
For example, he said, non-financial firms like China's WeChat have created platforms enabling people to not only chat, but also buy and pay for goods and services, including financial products, all within one app.
To help lenders better compete and innovate, Mr Heng said, banks will soon no longer need approval from MAS if they want to conduct or acquire major stakes in digital platforms matching buyers and sellers and businesses that sell consumer goods and services online.
However, such non-financial businesses should be limited to just 10 per cent of a bank's capital funds.
Full details of the proposed new rules will be released in a consultation paper in September.
Responding to the announcement, DBS chief executive Piyush Gupta told The Straits Times: "The logic is compelling.
"With the ubiquity of the smartphone, customers increasingly want banking to be seamlessly integrated into their daily lives.
"In China, for example, ICBC (the Industrial and Commercial Bank of China) has a site that is one of the leading online shopping malls. There are a number of areas where a banking service can be nicely integrated into e-commerce, and we welcome the opportunity to do so."