Singapore to issue new digital banking licenses to non-banks

Bloomberg

Singapore will issue as many as five new digital bank licenses to non-bank firms as the island nation seeks to strengthen competition in financial services, according to one of its top regulators.
“We welcome firms with innovative value propositions to apply for the new digital bank licenses, even if they have not yet established a track record in banking,” Monetary Authority of Singapore Chairman Tharman Shanmugaratnam said in a speech at the annual banking industry dinner. At the same time, the regulator “will not allow value-destructive competition to the detriment of long-term financial system stability,” he said.
Banks worldwide face increasing competition from technology firms that are getting into financial services including payments and lending. The UK and Hong Kong are among major economies that have allowed licenses for virtual banks, creating a new generation of rivals for traditional lenders. Singapore Telecommunications Ltd, Grab and Razer Inc said they would consider this opportunity.
“Having ventured into mobile financial services, these are interesting developments,” Singtel said in a statement. “We are open to exploring the feasibility of such an opportunity and will be reviewing the licensing conditions.”
Gaming firm Razer already processes digital payments and has an e-wallet service in Malaysia with a Singapore app coming soon.
Grab, Singapore’s ride-hailing giant, will study the digibank licensing requirements closely, said Reuben Lai, Grab Financial Group’s senior managing director. The company will keep an open mind as to how best to pursue this, including whether to work with suitable partners, he said.
Digital banking isn’t new in Singapore, where the regulator has allowed local lenders to pursue online-only business models since 2000. DBS Group Holdings and United Overseas Bank, both based in the city-state, also operate digital banks in other Asian countries.