SINGAPORE: Singapore’s central bank has received 21 applications for digital bank licences at the close of application on Dec 31, 2019.
There were seven applications for the digital full bank licences and 14 applications for the digital wholesale bank licences, the Monetary Authority of Singapore (MAS) said in a media release on Tuesday (Jan 7).
Applicants include e-commerce firms, technology and telecommunications companies, fintechs and financial institutions.
"The majority of applicants are consortiums, with entities seeking to combine their individual strengths to enhance the digital bank’s value proposition," said MAS.
The five licences on offer include two digital full bank licences and three digital wholesale bank licences.
Digital full banks will be allowed to take retail deposits, while digital wholesale banks will focus on serving small and medium enterprises and other non-retail segments.
These new digital banks are in addition to any qualifying subsidiaries that Singapore bank groups may already establish under MAS' current regulatory framework.
MAS said it was a “significant initiative” that aims to enable “non-bank players with strong value propositions and innovative digital business models to offer banking services”.
Singapore gaming firm Razer said last week it was leading a consortium of companies that has applied for a digital full banking licence.
Singtel also announced late last year it was partnering with Southeast Asian ride-hailing firm Grab Holdings to apply for a digital full banking licence.
Others bidding are Alibaba Group affiliate Ant Financial, Singapore-based Internet firm Sea Ltd, a group led by Singapore tycoon Ron Sim's firm V3 Group. Hong Kong financial services group AMTD's consortium, which includes an affiliate of Xiaomi, has also applied, Reuters reported.
Some contenders hope deep customer data combined with new technology will help them win customers in Singapore, which has over 150 deposit-taking institutions and about US$2 trillion in total assets under management.
"One of the key motivations for seeking a Singapore digital bank license is that it is easier to demonstrate a proven track record and regional connectivity to other regulators in ASEAN where digital banks are going to be available in coming time," said Mr Varun Mittal, who heads the emerging markets fintech business at consultancy EY.
CRITERIA FOR APPLICATION
Applicants must have a track record of at least three years in an existing business within the technology or e-commerce fields, MAS previously said.
The applicants must also be able to provide clear value propositions on how it can serve existing unmet or under-served needs in the Singapore market.
This means that their business models must be different from what existing banks already have.
Other requirements include a sustainable business model that shows a path towards profitability, as well as a feasible exit plan.
There must be at least one individual in the applicant groups to hold a minimum 20 per cent stake in the proposed digital bank or who is in a position to control voting power of at least 20 per cent.
The full-fledged banks must be based in Singapore and controlled by Singaporeans. Foreign companies are eligible only if they form a joint venture with a local company and a Singaporean must have management control over the venture.
The digital wholesale banks, serving small and medium enterprises and other non-retail segments, are not allowed to take deposits from retail customers except for fixed deposits of at least S$250,000.
"MAS will evaluate all eligible applications based on their value propositions including the innovative use of technology to serve customer needs, their ability to manage a prudent and sustainable digital banking business, and their contributions to Singapore’s financial centre," the central bank said on Tuesday.
Successful applicants will be notified in June 2020 and are expected to start their business by mid-2021.