Grab-Singtel venture, Jack Ma's Ant Group, tech firm Sea among those issued digital bank licences in Singapore

SINGAPORE: A joint venture by Singtel and Grab as well as technology firm Sea and Jack Ma's Ant Group are among those that have been selected for the four digital bank licences issued by the Monetary Authority of Singapore (MAS). 

In an announcement on Friday (Dec 4) evening, the Singapore central bank said the Singtel-Grab consortium and an entity wholly owned by Sea Limited were awarded the two digital full bank licences that permit retail banking.

The other two licences for digital wholesale banks - which will serve small- and medium-size enterprises (SMEs)  - and other non-retail segments, were awarded to China’s Ant Group, owned by billionaire Jack Ma, and a consortium comprising Greenland Financial, Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management.

MAS said successful applicants must meet "all relevant prudential requirements and licensing pre-conditions" before they will be granted with their respective licences.

It added that it expects these new digital banks to commence operations from early 2022.

READ: Companies vying for digital bank licence may face uphill battle, say experts

LIBERALISING THE BANKING SECTOR

The MAS first announced in June last year that it would issue up to five digital banking licences to non-bank players, in one of the country’s biggest steps to liberalise its banking sector.

It received 21 applications by end-2019, before whittling it down to 14 eligible hopefuls six months later.

The assessment period for the online-only banks was pushed back to the second half of this year, instead of June as originally intended, due to the COVID-19 pandemic.

MAS on Friday said its assessment was “done on a holistic basis” that took into account “all relevant considerations for each criterion”.

It 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 two selected DFB (digital full bank) applicants were clearly stronger than the other eligible DFB applicants,” MAS said in its press release. 

“As for the DWBs (digital wholesale bank), 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," it added.

As the digital wholesale bank licences are introduced as a pilot, MAS said it "will review whether to grant more of such licences in the future". 

Online-only banks are not new, with such concepts already operating in parts of Asia such as China and Japan.

They offer services that one can expect from conventional banks, such as accepting deposits, loans, facilitating payments and loans, except that these will be performed online as these banks do not have physical branches.

"MAS applied a rigorous, merit-based process to select a strong slate of digital banks," said the central bank's managing director Ravi Menon on Friday.

“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,” he said.