05 December 2020

New Digital Banks in Singapore

On 4 December 2020, the Monetary Authority of Singapore (MAS) announced four successful digital bank applicants. This is a much-awaited announcement which the financial industry has been watching for months.

Congratulations to these 4 successful applicants below

It will be separated into two categories of licenses. And, the applicants selected for the award of banking licences to operate digital banks are as follows:

Digital Full Bank (DFB)
  1. A consortium comprising Grab Holding Inc. and Singapore Telecommunications Ltd.
  2. An entity wholly-owned by Sea Ltd.

Digital Wholesale Bank (DWB)
  1. A consortium comprising Greenland Financial Holdings Group Co. Ltd, Linklogis Hong Kong Ltd, and Beijing Co-operative Equity Investment Fund Management Co. Ltd.
  2. An entity wholly-owned by Ant Group Co. Ltd.

The successful applicants must meet all relevant prudential requirements and licensing pre-conditions before MAS grants them their respective banking licences. MAS expects the new digital banks to commence operations from early 2022. 

Huh? What are the differences between DFB and DWB licenses?

The digital bank licences will allow entities, including non-bank players, to conduct digital banking businesses in Singapore.
  • a DFB will be allowed to take deposits from and provide banking services to retail and non-retail customer segments.
  • a DWB will be allowed to take deposits from and provide banking services to SMEs and other non-retail customer segments.

Heated Competition

To recap, there were a total of 14 eligible applications and all of them were assessed on the following criteria:
  • 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.

The assessment was done on a holistic basis, taking into account all relevant considerations for each criterion. 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.

Credit to S.PRO

Why do these 4 companies emerge as the winners?

According to MAS, the two selected DFB applicants were clearly stronger than the other eligible DFB applicants. As for the DWBs, the two selected applicants met MAS’ expectations and were assessed to be demonstrably stronger across the criteria notwithstanding the general high quality of the eligible applicants.

MAS has thus decided to award banking licences to the two DWBs. As the DWBs are introduced as a pilot, MAS will review whether to grant more of such licences in the future.

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