The COVID-19 crisis continues to upend the economy, including even the world of digital banking.
As previously reported in this space, the Monetary Authority of Singapore (MAS), the country’s central bank, announced its intention to issue five digital banking licenses last year. That was before the pandemic hit.
Now the contenders will have to speak to the current economic crisis as Singapore officials begin interviewing the candidates soon.
Singapore has drawn interest from 21 applicants, Reuters reported. “The coronavirus outbreak is likely to alter business plans of players and the regulator will be keen to understand changes in their strategy before making a shortlist,” said a source.
The news service reported the seven bidders for the retail licenses include a venture of ride-hailing company Grab and Singapore Telecommunications, internet firm Sea; a group headed by gaming firm Razer; another led by consumer tycoon Ron Sim; and FinTech firm MatchMove’s consortium with Singapura Finance.
“The new digital bank licenses mark the next chapter in Singapore’s banking liberalization journey,” MAS Senior Minister and Chairman Tharman Shanmugaratnam said last year when the opportunity for digital licenses was first announced. “We welcome firms with innovative value propositions to apply for the digital bank licenses, even if they have not yet established a track record in banking.”
The far-reaching effects of digitalization are triggering “a re-think of the role of banks, in most advanced financial centers,” Shanmugaratnam said. “We are starting with two digital full bank licenses, so as not to fragment Singapore’s small domestic retail banking market.”
For years, the nation’s large traditional banks — DBS Group Holdings, Oversea-Chinese Banking Corp. and United Overseas Bank — have dominated the market. Taking bids for digital licenses is widely considered the biggest shakeup in Singapore’s financial services market in two decades.
Two of the Singapore licenses will be full digital banking licenses, while the other three will be wholesale banking licenses. Full license holders will need to have capital reserves of S$1.5 billion ($1.1 billion).