Digital Banking

Singapore Mulls Issuing Digital-Only Bank Licenses

Singapore’s financial regulator, the Monetary Authority of Singapore (MAS), is in talks about letting online banks operate in the city.

According to a report in Bloomberg citing the regulator, MAS is looking at whether or not to let digital-only banks with a non-bank parent operate. “We have been engaging relevant stakeholders to ascertain the unique value that such entrants could bring to our banking landscape, and understand how potential risks will be managed and contained,” the regulator said in an email statement to Bloomberg.  The regulator went on to say the banking industry in Singapore has been embracing digitization, with local lenders allowed to launch digital-only businesses since 2000. Bloomberg noted that DBS Group, Oversea-Chinese Banking Corp. and United Overseas Bank have digital offerings and compete against local FinTechs and foreign banks who operate in the region.

The rise of digital competition in Singapore isn’t keeping the existing banks up at night. In a recent interview with Bloomberg, DBS Chief Executive Officer Piyush Gupta dismissed the competition from local banks and the potential entrance of purely digital offerings. “To my mind, that’s just basically giving a few more banking licenses,” he told Bloomberg, noting that the only problem would come if the digital banks have more lenient rules than traditional banks. He said the real challenge is making sure regulators don’t create an uneven playing field. Gupta noted that he doesn’t think most regulators seem inclined to do that. Meanwhile, OCBC Chief Executive Samuel Tsien said in an email to Bloomberg that digital-only banks are inevitable in Singapore but warned the operating model of these banks can’t be one-size-fits-all.

The discussions on the part of MAS come as regulators across the globe are trying to figure out how to deal with the rise of FinTechs and what it means to traditional banking. Hong Kong started issuing virtual banking licenses earlier this year.

 

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