The Monetary Authority of Singapore (MAS) announced four successful digital bank applicants.
2 The applicants selected for the award of banking licences to operate digital banks are as follows:
Digital Full Bank (DFB)
- A consortium comprising Grab Holding Inc. and Singapore Telecommunications Ltd.
- An entity wholly-owned by Sea Ltd.
Digital Wholesale Bank (DWB)
- 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 wholly-owned by Ant Group Co. Ltd.
The successful applicants must meet all relevant prudential requirements and licensing pre-conditions before MAS grants them their respective banking licences. MAS expects the new digital banks to commence operations from early 2022.
3 MAS had previously announced that it would award banking licences for up to two DFBs and up to three DWBs. There were a total of 14 eligible applications. The applications were assessed on the following criteria:
- value proposition of business model, incorporating innovative use of technology to serve customer needs and reach under-served segments;
- ability to manage a prudent and sustainable digital banking business; and
- growth prospects and other contributions to Singapore’s financial centre.
The assessment was done on a holistic basis, taking into account all relevant considerations for each criterion. MAS 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[1] .
4 To select the successful applicants, MAS set stringent expectations across the assessment criteria. The two selected DFB applicants were clearly stronger than the other eligible DFB applicants. As for the DWBs, 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. MAS has thus decided to award banking licences 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.
5 Mr Ravi Menon, Managing Director of MAS, said, “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.”
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Additional Information:
In June 2019, MAS announced the digital bank framework, which aims to enable non-bank players with strong value propositions and innovative digital business models to offer digital banking services. DFBs will be provide a wide range of financial services and take deposits from retail customers, while DWBs will focus on serving SMEs and other non-retail segments.
These new digital banks are in addition to any subsidiaries that Singapore-incorporated banking groups may already establish under MAS’ existing regulatory framework, including with joint venture partners, to operate new or alternative business models such as a digital-only bank.
Details of the assessment criteria can be found on MAS’ website.
[1] In June 2020, MAS asked all eligible applicants to review the business plans and assumptions underpinning their financial projections, including sources of funding, as the COVID-19 pandemic has significantly impacted macroeconomic and business conditions since the applications were received at the end of 2019. An independent review of these assumptions was also required.
