Industry and digital players will be studying closely how a digital bank will complement their businesses in what has been described as one of the biggest policy moves in Singapore's bank liberalisation in the past two decades.
Consultants have said a digital banking licence may also appeal to telco Singtel, which is expanding beyond its traditional services into areas such as mobile payments. "We are open to exploring the feasibility of such an opportunity and will be reviewing the licensing conditions," said a Singtel spokesman.
A potential entry by Grab - backed by Japan's SoftBank Group - and others would mark the biggest shake-up in years for a market dominated by DBS Bank, OCBC Bank and United Overseas Bank. Last year, Grab teamed up with Japan's Credit Saison to provide loans in South-east Asia.
Mr Reuben Lai, senior managing director of Grab Financial Group, said yesterday: "We will study the digibank licensing requirements closely, and are keeping an open mind as we assess how best to pursue this, including whether to work with suitable partners."
Gaming hardware manufacturer Razer will "definitely consider applying for the digital bank licence", Razer chief strategy officer Lee Li Meng said.
He added that the announcement is timely as Razer has been growing its fintech business in South-east Asia. "We already process billions of dollars in digital payments and our Razer Pay e-wallet is already one of the largest in Malaysia, with the Singapore app coming soon. Further, we just announced a partnership with Visa to introduce a pre-paid Visa solution through the Razer Pay app, which will allow unbanked populations in the region to access Visa's 54 million merchant locations worldwide," he said.
Existing bankers are also keeping an eye on the developments.
DBS chief executive officer Piyush Gupta pointed out how technology giants were entering the payments game, and said that it is "clear that between them, the Chinese techfins and other regional players, and possibly new 'virtual banks', we are in for an increasingly competitive future".
But he remains confident that Singapore banks can today hold their own even against new competitors, with one caveat - they must have a level playing field. "Capital and liquidity requirements for all competitors should be alike," he said.
OCBC Bank Group CEO Samuel Tsien said the bank will be studying the new framework closely to see how a virtual bank will complement its current businesses.
UOB's deputy chairman and CEO Wee Ee Cheong said: "UOB has been developing our digital capabilities to make banking simpler, smarter and safer for our customers, and to serve them seamlessly in the way they prefer - offline or online, physical or digital, or a combination."
Mr Varun Mittal, EY global emerging markets fintech leader, said that with the decision to issue new digital bank licences, Singapore has reaffirmed its place as a leading example of regulators collaborating with industry players, ecosystem partners and potential entrants to the market to promote innovation.
"The inclusive approach... has helped ensure that there are no surprises for Singapore's financial sector," he said.