Singapore to issue five new digital banking licenses to spur innovation in financial sector

The move aims to enhance innovation in Singapore’s financial sector

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Singapore to issue five new digital banking licenses to spur innovation in financial sector

The Monetary Authority of Singapore (MAS) said last Friday that it aims to issue up to five new digital banking licenses, which will be extended to non-bank players. Applications for these will start in August, MAS said in an official statement.

This announcement differs from the policy statement MAS issued in 2000 allowing Singapore incorporated banking groups to set up digital bank subsidiaries.

The five new digital licenses will comprise of two digital full bank licenses that will allow licensees to provide a wide range of financial services and take deposits from retail customers. Up to three licenses will be digital wholesale bank licenses that will allow holders to serve Small and Medium Enterprises (SMEs) and other non-retail segments.

Business loans took up over 99% of all issued alternative loans in Singapore in 2017, according to an industry report on alternative finance compiled by the University of Cambridge. This means a huge market potential for financial institutions looking to provide business loans.

Tharman Shanmugaratnam, Senior Minister and Chairman of MAS, said that the entry of new digital players would add diversity to Singapore’s financial sector by compelling players to innovate and enhance their digital offerings.

The Singapore-headquartered ride-hailing platform Grab was reportedly eyeing a virtual banking license as it plans to move into online banking in Singapore. While it outlined intentions to introduce digital financial services at the Money 20/20 event in Singapore previously, it has yet to confirm that it seeks to apply for an online banking license in the city-state.

The financial sector, considered one of Singapore’s key economic pillars, is again expected to be a main driver of growth this year supported by increased investments in digitalization.