Singapore to have 4 digital banks, with Grab-Singtel and Sea getting digital full bank licences

Digital banks will not have a physical presence and all banking services will be done online.
Digital banks will not have a physical presence and all banking services will be done online.PHOTOS: ST FILE, LIM YAOHUI, REUTERS, SEA LIMITED

SINGAPORE - The Monetary Authority of Singapore (MAS) said on Friday (Dec 4) it will award digital full bank licences to the Grab-Singtel consortium and tech giant Sea, in a first for the city-state and a highly anticipated move that aims to liberalise the financial industry.

Like traditional banks, these players will provide retail customers with services such as opening accounts, deposits as well as issuing debit and credit cards.

However, digital banks will not have a physical presence and all banking services will be done online.

This is different from traditional banks - such as DBS, OCBC and United Overseas Bank - which offer some banking services via the Internet or mobile apps.

Digital full banks can also serve corporate customers.

Singapore's central bank will also grant digital wholesale bank licences to Ant Group as well as a consortium comprising Greenland Financial Holdings, Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management.

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 corporates and small and medium-sized enterprises.

MAS said in a statement on Friday that the successful applicants must meet all relevant prudential requirements and licensing preconditions before MAS grants them their banking licences.

The four successful applicants beat 10 other contenders, such as Razer Youth Bank; and a consortium led by Osim founder Ron Sim's V3 Group and EZ-Link.

They are expected to start business from early 2022.

MAS chief Ravi Menon said the central bank 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," he said.

MAS said that it set stringent expectations across the assessment criteria in the selection process. 

It said: “The two selected digital full bank (DFB) applicants were clearly stronger than the other eligible DFB applicants.

“As for the digital wholesale banks (DWBs), the two selected applicants met MAS’ expectations and were assessed to be demonstrably stronger across the criteria notwithstanding the general high quality of the eligible applicants.” 

MAS added that it will review whether to grant more DWB licences in the future as the licences are being introduced as a pilot. 

Ant Group, which will be issued a DWB licence, said it is grateful for the opportunity to further contribute to accelerating digital financial innovation and inclusion in Singapore and the region.

“We look forward to building stronger and deeper collaborations with all participants in the financial services industry in Singapore, as we work together to make financial services more accessible for SMEs while supporting local talent development in the process,” it said. 

Mr Anthony Tan, group chief executive and co-founder of Grab, said: “We are honoured to have this opportunity to build Singapore’s next-generation digital bank, and open up access to easy-to-understand and relevant financial services.”

Likewise, Mr Yuen Kuan Moon, group chief executive officer-designate of Singtel, said that with Singtel and Grab’s combined digital expertise and customer knowledge, the consortium is well-placed to improve banking services for consumers and enterprises. 

Mr Forrest Li, chairman and group chief executive officer of Sea, said: “As a proudly home-grown 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.” 

The tech giant owns e-commerce platform Shopee, game developer Garena and digital payments arm SeaMoney.

Incumbent players also welcomed the announcement. 

DBS Singapore country head Shee Tse Koon said: "We congratulate the successful applicants and welcome them to our world, where digital banking is already a reality...  We believe that the new entrants will spur us all on to do better and we will continue to focus on making banking more intuitive and invisible so that our customers can live more and bank less."

UOB chief executive Wee Ee Cheong said: “Their presence will add to the healthy competition, especially in the area of digital innovations, for the benefit of Singapore’s consumers and businesses.”

He added: “Keeping the customer at the heart of all we do will ensure the continued success of our industry. This we believe should be the focus of innovation: addressing the diverse personal and business banking needs of our community.”

Mr Sunny Quek, OCBC’s head of consumer financial services Singapore, said: “Digital banks are expected to add some colour to the financial space but they face an already hyper-competitive environment.” 

He added that OCBC has embraced digitalisation early, in areas such as instant account opening, contactless payments and personalised recommendations based on data analytics. 

Although it was unsuccessful in its application, Razer Fintech congratulated the licence awardees. 

Chief executive Lee Li Meng said: “While we were hopeful to be able to start our journey here in Singapore, our strategy of extending the Razer Fintech business into digital banking remains unchanged.”

Singapore is not alone in its digital banking push.

Hong Kong issued four more virtual bank licences in May last year, bringing the total number of such licences to eight. The winners included Ant SME Services, a unit of Ant Group, and a Xiaomi-AMTD Group venture called Insight Fintech HK.

Countries such as the Philippines, China, Japan and South Korea also have virtual banks.

Twenty-one applications were submitted for digital bank licences in Singapore, with MAS saying it could award up to five. Of these, 14 met the eligibility criteria, MAS said in June without releasing the names of the contenders.

The following is a list of applicants, including the new licence holders and contenders which had made their bid public.

Digital full bank licences:

- Tech giant Sea, which owns e-commerce platform Shopee, game developer Garena and digital payments arm SeaMoney

- Grab and Singtel submitted a joint application. Grab will hold a 60 per cent stake with the telco giant holding the remaining 40 per cent in the consortium.

- Razer Youth Bank. Gaming firm Razer's application was through a consortium that includes Sheng Siong Holdings, tech firm LinkSure Global, automotive marketplace Carro, insurer FWD and Insignia Ventures Partners. Razer Fintech owns 60 per cent of the consortium.

- Beyond consortium, led by Osim founder Ron Sim's V3 Group and payments company EZ-Link. It also includes Temasek unit Heliconia, property developer Far East Organization and the Singapore Business Federation.

Digital wholesale bank licences:

- Alibaba-backed Ant Group, formerly known as Ant Financial 

- A consortium comprising Hong Kong financial services group AMTD, peer-to-peer lending platform Funding Societies, Singapore utilities provider SP Group, and Xiaomi Finance

- A consortium led by mainboard-listed wealth management firm iFast Corporation, with two Chinese partners, digital bank operator Yillion Group and fintech company Hande Group

- ByteDance Technology, which owns video-sharing app TikTok

- A consortium comprising Hong Kong-listed supply chain finance company Sheng Ye Capital, financial conglomerate Phillip Capital and artificial intelligence firm Advance.AI. All three members are owned or led by Singaporeans.