The Monetary Authority of Singapore (MAS) has announced four successful digital bank applicants, two digital full banks (DFBs), and two digital wholesale banks. The successful applicants must meet all relevant prudential requirements and licensing pre-conditions before MAS grants them their respective banking licences.
The two DFBs are:
- A consortium comprising Grab Holding and Singapore Telecommunications (Singtel).
- An entity wholly-owned by Sea.
The two DWBs are:
- A consortium comprising Greenland Financial Holdings Group Company, Linklogis Hong Kong, and Beijing Co-operative Equity Investment Fund Management Company.
- An entity wholly-owned by Ant Group Company.
MAS expects the new digital banks to commence operations from early 2022.
MAS had previously announced that it would award banking licences for up to two DFBs and up to three DWBs. There were a total of 14 eligible applications. These were assessed on:
- Value proposition of business model, incorporating innovative use of technology to serve customer needs and reach under-served segments;
- Ability to manage a prudent and sustainable digital banking business; and
- Growth prospects and other contributions to Singapore’s financial centre.
MAS also took into consideration the eligible applicants’ reviews of the business plans and assumptions underpinning their financial projections arising from the impact of the COVID-19 pandemic*.
According to MAS, the two DFB applicants selected were clearly stronger than the other eligible DFB applicants. As for the DWBs, the two selected met MAS’ expectations and were assessed to be demonstrably stronger across the criteria notwithstanding the general high quality of the eligible applicants. As the DWBs are introduced as a pilot, MAS will review whether to grant more of such licences in the future.
Ravi Menon, MD, MAS, said, “MAS applied arigorous, 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.”
MAS announced the digital bank framework in June 2019. The framework aims to enable non-bank players with strong value propositions and innovative digital business models to offer digital banking services. DFBs will provide a wide range of financial services and take deposits from retail customers, while DWBs will focus on serving small and medium-sized enterprises (SMEs) and other non-retail segments. These new digital banks are in addition to any subsidiaries that Singapore-incorporated banking groups may already establish under MAS’ existing regulatory framework, including with joint venture partners, to operate new or alternative business models such as a digital-only bank.
*In June 2020, MAS asked all eligible applicants to review the business plans and assumptions underpinning their financial projections, including sources of funding, as the COVID-19 pandemic has significantly impacted macroeconomic and business conditions since the applications were received at the end of 2019. An independent review of these assumptions was also required.
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