Singapore regulators have proposed rules that will make it easier for banks to conduct or invest in non-financial businesses, such as eCommerce and digital payment platforms — allowing banks to better compete with non-bank firms in these areas.
According to Bloomberg News, under the bank regulation proposals, lenders will no longer need regulatory approval to invest in such businesses. The Monetary Authority of Singapore will cap the investment to 10 percent of the bank’s capital funds.
“Banks are facing increasing competition from online and non-financial players that have leveraged their large user base to provide digital wallets, payments and remittance services,” said Finance Minister Heng Swee Keat.
For example, companies like Alibaba Group Holding Ltd., which is expanding its financial services, including digital payments, in Southeast Asia, “are in effect no different from banks,” DBS Group Holdings Ltd. Chief Executive Officer Piyush Gupta said.
“The logic is compelling,” Gupta said. “With the ubiquity of the smartphone, customers increasingly want banking to be seamlessly integrated into their daily lives. There are a number of areas where a banking service can be nicely integrated into eCommerce, and we welcome the opportunity to do so.”
Consumers at seven major Singapore banks in the city state will be able to transfer Singapore dollars to one another almost immediately, using mobile phone numbers and national identification numbers and without knowing recipients’ account details.
However, Singapore banks will continue to be prohibited from entering certain businesses, including property development and provision of hotel and resort facilities.