Singapore studying possibility of providing licenses to virtual banks

Bloomberg

Singapore is discussing the possibility of allowing virtual banks to operate in the city state, the Monetary Authority of Singapore said on Tuesday.
“MAS is studying whether to admit such digital-only banks with non-bank parentage,” the financial regulator said in an emailed reply to questions from Bloomberg News. “We have been engaging relevant stakeholders to ascertain the unique value that such entrants could bring to our banking landscape, and understand how potential risks will be managed and contained.”
The MAS review comes as regulators around the world grapple with the rise of financial technology and the implications for the banking system. Earlier this year, Hong Kong started issuing virtual banking licenses as a way to shake up retail lenders and compete better with regional economies such as China and India.
Among the firms to receive Hong Kong permits, three have partnered with financial institutions such as Standard Chartered Plc, BOC Hong Kong Holdings Ltd. and ZhongAn Online P&C Insurance Co. Fintech firm WeLab Holdings Ltd. has also received a Hong Kong banking license. The new entrants are targeting a market dominated by HSBC Holdi-
ngs Plc, which has a leading share of local retail and corporate lending, mortgages and credit cards.
In its statement, the MAS said digitalisation isn’t new to Singapore’s banking industry, noting that local lenders have been allowed to pursue digital-only business models since 2000. DBS Group Holdings Ltd., Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. all have digital strategies, and compete with home-grown
financial-technology firms as well as the local branch networks of HSBC, Citigroup Inc. and other foreign banks.
DBS Chief Executive Officer Piyush Gupta downplayed the competitive threat for the local banks of the possible entry of digital-only banks in a recent interview with Bloomberg News. “To my mind, that’s just basically giving a few more banking licenses,” he said.