Singapore Digital Bank Licenses: What Singaporeans Need to Know

Singapore Digital Bank Licenses: What Singaporeans Need to Know

Ming Feng

Monetary Authority of Singapore (MAS) to Issue 5 Digital Bank License This Year

Due to COVID-19 pandemic, the assessment for digital bank license was delayed. MAS has now resumed the licensing process.

MAS will be looking to make a decision on which parties will they award the five digital bank licenses to.

The five digital bank licenses can be broken down into

  • Up to two digital full bank licences
  • Up to three will be digital wholesale bank licences

The difference between the two types of licenses is simple:

Digital Full Banks

Digital full banks are allowed to take deposits from retail customers like any of us. This function is something familiar to all Singaporeans with a savings account, very much like the DBS banks and OCBC banks which we are familiar with, but fully digitalised.

Simply put, all your banking services will be done online without the need to head down to a physical branch.

Digital Wholesale Banks

Digital wholesale banks are more catered towards the non-retail part of banking. Think along the lines of providing banking services that cater to the monetary needs of Small and medium-sized enterprises (SMEs)

Singapore Digital Bank License: 14 Applicants Shortlisted

Out of the total 21 applicants that submitted their applications for the banking license, 14 of them were shortlisted.

Shortlisted applicants will be presenting their proposals via virtual meetings.

They will be evaluated based on:

  • sustainability
  • business model
  • value proposition
  • use of technology

MAS did not reveal much information about the applicants who were shortlisted, but here’s what we know so far.

Applicants who got shortlisted:

Singapore digital bank license shortlist

Applicants/ ConsortiumsType of Digital Bank LicenseShortlisted Applicants
Singtel and GrabDigital Full Bank LicenseYes
Sea LimitedDigital Full Bank LicenseYes
Razer, Sheng Siong Holdings, FWD, LinkSure Global, Insignia Venture Partners and CarroDigital Full Bank LicenseYes
V3 Group, EZ-Link, Far East Organisation, Singapore Business Federation, Sumitomo Insurance Co Ltd and Heliconia Capital ManagementDigital Full Bank LicenseYes
MatchMove's consortium with Singapura FinanceDigital Full Bank LicenseYes
Standard Chartered and NTUC EnterpriseDigital Full Bank LicenseTBC
Ant FinancialDigital Wholesale Bank LicenseTBC
iFast Corporation, Hande and YillionDigital Wholesale Bank LicenseYes
ShengYe Capital, Phillip Capital and Advance AIDigital Wholesale Bank LicenseYes
AMTD, Xiaomi, SP Group and Funding SocietiesDigital Wholesale Bank LicenseYes

Why Does Digital Bank Even Mean?

Source: giphy

What on Earth does digital bank even mean? How does it affect Singaporeans?

A simple way to looking at this is your usual retail bank going fully online. All our usual banking activities are now done with the lack of a physical bank branch.

Singaporeans can now perform these activities with the help of their mobile devices and by going online.

Should the digital banks do a really good job in digitalising the way traditional banks perform certain activities such a

  • Depositing money
  • Withdrawing money to make payments
  • Transferring money
  • Savings account management
  • Applying for loans and financial products
  • Paying our bills

How Singaporeans Can Benefit from Digital Banks?

Singaporeans will be able to benefit a more efficient banking system at the convenience of their fingertip.

On top of that, digital banks can take a step further with more personalisation when it comes to product recommendations from all the data they have gathered.

Having recognised that digital banks have less overhead to upkeep, the cost of maintaining bank branches and ATMs can translate into higher interest rates for customers. Other benefits include:

  • Lower fees since there will probably be no middleman for every financial product sold to me
  • Way better customer service since the lack of bank branch will mean that digital banks investing more into their customer service to gain trust and loyalty of their customers.
  • Save the Earth! With digitalisation, there will be fewer application forms to fill.

Some of these benefits have their downside too.

With convenience, there is also a chance that your privacy will be breached. Security breach on the bank’s network will also be another concern to consumers.

Examples of Digital Banks Around the World

The concept of a digital bank is not something new. This concept has been adopted around the world.

Here are some examples of digital banks around the world:

  • Neat – Hong Kong
  • Doconomy – Sweden
  • Up Banking – Australia
  • Starling Bank – United Kingdom
  • Chime – America
  • Ant Financial – China
  • WeBank – China
  • Kakao Bank – Korea
  • Tencent Financial Technologies – China

Some of these names should be of no stranger to any of us.

What Can Singaporeans Expect in the Upcoming Months

Building up to end 2020, we will be seeing a lot more announcements on some of the applicants for the digital bank license. We will constantly update this article to bring you the latest news on Singapore’s digital bank licenses.

About Ming Feng
A stint in Bloomberg gifted me with a beer belly, which only grew larger when I moved on to become a Professional Trader. Now I turn caffeine into digestible finance-related content.
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