The response to the move by Singapore to open up to digital-only banks has been overwhelming. By the Dec 31 deadline, the Monetary Authority of Singapore had received 21 applications for the five licences on offer - 14 applications for digital wholesale banks, which will serve mainly the corporate sector, and seven for digital full banks, which will be able to offer retail banking services. Not surprisingly, there has been higher demand for wholesale bank licences, which need lower capital requirements and offer more scope to cater to under-banked segments, such as small and medium-sized enterprises as well as entrepreneurs. But both categories of digibanks have opportunities to innovate and add value.
One of the striking features of the profiles of the applicants for the licences - which are mainly consortiums - is their diversity. They include e-commerce players, a ride-hailing firm, a telco, a gaming company, a supermarket operator, a media company, an insurance firm, the Singapore Business Federation (which has surprisingly decided to join one particular consortium), as well as established providers of digital financial services, including in China. They will bring with them their own business models, customers as well as large data sets on spending patterns and business needs, which they can use to target specific segments. For example, gaming company Razer and video-sharing firm ByteDance can target millennials who make up much of their user bases; ride-hailing and food delivery firm Grab can reach the diverse community that uses its various services; and several players, including e-commerce companies such as Sea, can tap the under-banked segment of micro-enterprises.