SINGAPORE: The Monetary Authority of Singapore (MAS) will issue up to five new digital bank licences, which will be extended to non-bank players, it was announced on Friday (Jun 28).
This is in addition to any digital banks that may be established by Singapore banking groups under the existing internet banking framework that was introduced in 2000.
“The new digital bank licences mark the next chapter in Singapore’s banking liberalisation journey,” Senior Minister and MAS Chairman Tharman Shanmugaratnam said at the 46th annual dinner of The Association of Banks in Singapore (ABS).
"They will ensure that Singapore’s banking sector continues to be resilient, competitive and vibrant."
The new licences will comprise up to two digital full bank licences, which will allow licensees to provide a wide range of financial services and take deposits from retail customers.
There will also be up to three digital wholesale bank licences, which will allow licensees “to serve SMEs (small and medium-sized enterprises) and other non-retail segments”, MAS said in a media release.
Companies headquartered in Singapore and controlled by Singaporeans will be able to apply for digital full bank licences.
Foreign companies who wish to apply must form a joint venture with a Singapore company, the authority added. The joint venture must meet the headquarter and control requirements. Digital wholesale bank licences are open to all companies.
Gaming company Razer said it will "definitely consider" applying for the digital bank licence.
Its new Southeast Asia headquarters is set to open at Singapore's one-north next year, with the company saying it will have "the largest headcount" of their 18 global offices.
"This announcement is timely as Razer has been growing our fintech business rapidly in the Southeast Asia region," said chief strategy officer Limeng Lee.
"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."
"ANCHORED IN SINGAPORE"
MAS is starting with two digital full bank licences “so as not to fragment Singapore’s small domestic retail banking market”, Mr Tharman added.
Those applying for the new licences have to be anchored in Singapore to “maintain a strong local core in our banking system”, he said, and to “avoid an unintended unilateral liberalisation of our full bank regime as a result of our WTO (World Trade Organisation) commitments”.
The digital wholesale banks will be introduced as a pilot and MAS will review whether to grant more of such licences in the future, the Senior Minister told the audience.
Applications are expected to open in August, and more details on eligibility and admission criteria will be provided later.
“The entry of new digital players will add diversity and strengthen Singapore’s banking system in the digital economy future,” MAS said.
“With innovative business models and strong digital capabilities, these players can cater to under-served segments of the market. They will provide impetus for existing banks to continue enhancing the quality of their digital offerings.”
In July 2000, MAS issued a policy statement allowing Singapore banking groups to set up digital bank subsidiaries.
The banks could either set up the subsidiaries themselves or with joint venture partners where the Singapore banks retain control.
The minimum paid-up capital required of the subsidiaries is set at S$100 million, given that the parent banks meet the S$1.5 billion capital requirement.
United Overseas Bank (UOB) welcomed the new digital bank licences and the "diversity that the new players may bring" with it.
“Banking will continue to be shaped by how financial service providers ensure customers’ interests are not only anticipated, met and protected, but that their experiences are also differentiated," deputy chairman and CEO Wee Ee Cheong said.