Monetary Authority of Singapore Announces the First Four Digital Banks to Receive Regulatory Approval

Monetary Authority of Singapore (MAS) announced on June 28, 2019, that it would issue up to two digital full bank (DFB) licenses and three digital wholesale bank (DWB) licenses. Last June, MAS announced that 14 out of 21 applications to become digital banks have met the eligibility criteria for the Fintechs to be considered.

Today, MAS has revealed the 4 selected firms that will become the first completely digital banks providing services to consumers and businesses.

Ravi Menon, Managing Director of MAS, commented on the news:

“MAS applied a rigorous, merit-based process to select a strong slate of digital banks. We expect them to thrive alongside the incumbent banks and raise the industry’s bar in delivering quality financial services, particularly for currently underserved businesses and individuals. They will further strengthen Singapore’s financial sector for the digital economy of the future.”

According to a note distributed by MAS, the following firms have received approval:

Digital Full Bank (DFB) License

  • A consortium comprising Grab Holding Inc. and Singapore Telecommunications Ltd.
  • An entity that is wholly-owned by Sea Ltd.

Digital Wholesale Bank (DWB) License

  • A consortium comprising  Greenland Financial Holdings Group Co. Ltd, Linklogis Hong Kong Ltd, and Beijing Co-operative Equity Investment Fund Management Co. Ltd.
  • An entity that is wholly-owned by Ant Group Co. Ltd. 

Specific information on the criteria is available here. In brief, a DFB may offer services, including deposits, to retail and non-retail customer segments. A DWB can provide banking services, including deposits, to SMEs.

MAS added that for these Fintechs there is still work to be done as the successful applicants must meet all relevant prudential requirements and licensing pre-conditions before MAS grants them their respective banking licenses. MAS anticipates that the new digital banks will commence operations from early 2022.

MAS said the assessment was done on a “holistic basis,” taking into account all considerations for each prescribed criteria. MAS said it 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.

The regulator explained that it set stringent expectations across the assessment criteria. The two selected DFB applicants were said to be clearly stronger than the other eligible DFB applicants. As for the DWBs, the two selected applicants met the regulatory 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 licenses 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.

The new digital banks are not to the exclusion of establishment banks that may offer the full stack of digital banking services.

Singapore has moved relatively rapidly to foster an ecosystem that recognizes that digital transformation is taking place across all financial services. Policymakers moved quickly to create a regulatory compliant path for digital banks to compete against establishment financial services firm.

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