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Friday, December 4, 2020 – 7:28 pm
The Grab-Singtel alliance and consumer internet company Sea took the two coveted full digital banking licenses at stake, the Monetary Authority of Singapore (MAS) announced late Friday.
They were among the four digital banking licenses granted by MAS, emerging victorious from a total of 21 applications thrown into the ring.
The two digital wholesale bank licenses were secured by Ant Group of China; and a consortium consisting of Greenland Financial Holdings, Linklogis Hong Kong, and Beijing Co-operative Equity Investment Fund Management.
The last four to make the cut came from a shortlist of 14 candidates in June, with five full digital banks and nine digital wholesale banks remaining in the running.
MAS expects the new digital banks to start operating in early 2022. He added that selected applicants must “meet all relevant prudential requirements and pre-licensing conditions before MAS will grant them their respective banking licenses.”
Applications were evaluated according to the following criteria:
1) value proposition of the business model, which incorporates the innovative use of technology to meet customer needs and reach underserved segments;
2) ability to manage a prudent and sustainable digital banking business;
3) Growth prospects and other contributions to Singapore’s financial center.
MAS also said that it took into consideration the eligible applicants’ reviews of business plans and the assumptions that support their financial projections derived from the impact of the Covid-19 pandemic.
In particular, MAS noted that the two selected digital full bank applicants were “clearly stronger” than the rest. As for the digital wholesale banks, the two that won met MAS’s expectations and were “assessed as demonstrably stronger on all criteria despite the overall high quality of eligible applicants.”
As digital wholesale banks are introduced as a pilot, MAS said it will review whether it will grant more such licenses in the future.
Digital bank contenders that did not obtain a license include a Razer-led consortium with partners such as Sheng Siong Holdings, a consortium led by Ron Sim’s V3 Group and EZ-Link, and a Matchmove-led offering that includes Singapura Finance.
Others that were not licensed include the iFast-led consortium with Chinese partners Yillion Group and Hande Group, and an AMTD-led group consisting of Funding Societies from peer-to-peer lending platform, utility provider SP Group, and Xiaomi. Finance.
This marks a new chapter in the history of Singapore’s banking liberalization, following the announcement of the new digital banks by Chief Minister Tharman Shanmugaratnam in June 2019. Regulators in Asia have also been enthusiastic about the idea that banks non-banks better deploy technology and data analytics to address financing needs that holders could lose.
Singapore’s batch of digital banks is expected to meet the needs of underserved segments in Singapore and the region, such as small and medium-sized businesses (SMEs), startups, tour workers and millennials.
They may have an advantage when it comes to their technological capabilities and skipping the legacy architecture, but banks established here have also invested in digital banking and are expected to hold their own in the face of new entrants.
Full digital banks will be able to receive deposits from retail customers, while digital wholesale banks will generally serve SMEs and other non-retail segments. They are expected to establish a “path to profitability” based on a five-year financial projection, as determined by MAS.
The results of the digital bank were originally scheduled for mid-2020, but were delayed due to Covid-19.
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