Digital & Technology

MAS announces reception of 21 Applications for Digital Bank Licences

The Monetary Authority of Singapore has announced that it has received 21 applications for digital bank licences as at the close of application on 31 December 2019.

The applications comprise of 7 applications for the digital full bank (DFB) licenses, and 14 applications for the digital wholesale bank (DWB) licences.

The Monetary Authority of Singapore (MAS) first announced their intent to issue up to five new digital bank licences, two DFB licenses and three DWB licenses, in late June of 2019, with Tharman Shanmugaratnam, Senior Minister and Chairman, MAS, stating that “The new digital bank licences mark the next chapter in Singapore’s banking liberalisation journey. They will ensure that Singapore’s banking sector continues to be resilient, competitive and vibrant.”

The MAS has stated that the new digital bank licences have attracted strong interest from a diverse group of applicants, including e-commerce firms, technology & telecommunications companies, FinTechs (such as crowd-funding platforms and payment services providers) and financial institutions.

The majority of applicants are consortiums, with entities seeking to combine their individual strengths to enhance the digital bank’s value proposition.

The MAS has thanked all interested applicants and stakeholders who have provided valuable comments and feedback on the digital bank framework and application process, and the MAS has committed to evaluating all eligible applications based on their value propositions including the innovative use of technology to serve customer needs, their ability to manage a prudent and sustainable digital banking business, and their contributions to Singapore’s financial centre.

Successful applicants are to be announced in June 2020, and successful applicants are expected to commence business by mid-2021.

Amongst those who have applied are said to be Ant Financial Services, and a consortium that includes Hong Kong-listed smartphone maker Xiaomi, according to a report by Yahoo Finance. Both of these entities won Hong Kong virtual banking licenses in 2019.

AMTD Group, a Hong Kong financial services group, is also said to be part of the same consortium as Xiaomi, having secured a virtual banking licence with Xiaomi last year.

Alongside these two firms are Funding Societies, a P2P lending platform, and SP Group, a leading utilities provider, in the consortium, according to a report by the Business Times.

Applicants which successfully attain a DWB license will be allowed to corporate clients only, meaning they can serve SMEs and other non-retail segments, with a capital requirement of over USD74,100,000 for the DWB.

Foreign entities are allowed to hold a majority stake in consortiums approved for a license, according to the same Business Times report. For a DFB license, the capital requirement is set at over USD1.11 billion, or SNG1.5 billion, according to a report by the Straits Times.

Grab, the ride-hailing company, and Razer, a leader in high-performance gaming hardware, software and systems, are also said to be in the mix of firms involved in the applications for the digital banking licenses.