Four licences to operate a digital bank have been issued in Singapore.
According to a statement of the Monetary Authority of Singapore (MAS), digital full bank (DFB) licences have been issued to Sea and a consortium of Grab Holding and Singapore Telecommunications. Digital wholesale bank (DWB) licences have been awarded to Ant Group and a consortium involving Greenland Financial Holdings Group, Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management.
DFB licence holders can provide retail and corporate banking services. DWB licence holders can only serve businesses, they cannot offer services to retail customers.
MAS announced five digital banks licences including two DFBs and three DWBs last July and received 14 eligible applications out of total 21 applications.
Applicants were judged on their business model, use of technology, sustainability of digital banking management, growth prospects and contribution to Singapore's financial centre.
DWBs have been introduced on a trial basis and MAS will review their operation before deciding whether or not to issue more. It is expected the four digital banks will start operation from early 2022.
Mark Tan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said, "This is likely to benefit Singaporeans in a number of ways. In particular, the lower costs incurred by digital banks compared to traditional banks is likely to result in greater competition. And there is likely to be increased convenience for users of digital banking services."
"However, some possible downsides that consumers who take up digital banking are likely to face include increased security risks and potentially a higher risk of technological disruptions. That being said, it is clear that adoption of digital banking in Singapore is likely to continue to grow," he said.
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