Up to five new digital bank licences will be issued here, paving the way for non-bank players to break into a local financial service scene dominated by a handful of traditional providers.

Announcing the move yesterday, Senior Minister Tharman Shanmugaratnam said the new digital bank licences mark the next chapter in Singapore's banking liberalisation journey. "We must take advantage of these opportunities that digital finance brings, and not be overtaken by the wave of changes taking place globally," said Mr Tharman, who is also chairman of the Monetary Authority of Singapore.

A digital-only bank provides all its facilities online and through mobile or tablet applications so it does not typically need physical branches.

The new licences are in addition to any digital banks that local lenders have set up under the existing Internet banking framework.

They will comprise up to two digital full bank licences that provide for a wide range of financial services and allow deposits to be taken from retail customers, and up to three digital wholesale licences that cater to small and medium-sized enterprises and other segments.