Singapore regulator receives 21 applications for digital bank licenses

Singapore has received 21 applications from several consortiums and companies for the five digital bank licenses that are up for grabs, the country’s financial regulator said on Tuesday.

The Monetary Authority of Singapore shook up the country’s banking sector for the first time in two decades when it announced last year it would issue two digital full bank and three digital wholesale bank licenses. That would potentially allow technology players and non-banking companies to challenge traditional lenders in the city-state.

The regulator will announce its decision in June and the winners are expected to start their businesses by mid-2021.

Applicants for those licenses include e-commerce firms, tech and telecommunications companies, crowd-funding platforms and payment services providers, according to MAS.

MAS has outlined the difference between applicants for digital full bank licenses and wholesale digital bank licenses. Digital full bank applicants must be “anchored in Singapore, controlled by Singaporeans and headquartered in Singapore,” while wholesale digital banks can be controlled by either Singaporeans or foreign entities.

Digital full bank

There were seven applicants for the two digital full bank licenses that would allow non-banking entities to take deposits from retail customers.

Initially, the successful entities would operate with some restrictions — they must have at least 15 million Singapore dollars ($11.12 million) funded by its founders or shareholders, and they can only collect a maximum of S$50 million in total deposits. Each customer can only deposit a maximum of S$75,000. The banks would only be able to offer “simple capital market products” to retail customers.

then all of MAS’ requirements are met, the restrictions would be lifted and the entities would be able to operate with no deposit caps and a minimum paid-up capital of S$1.5 billion.

Digital wholesale bank

There were 14 applicants for the three digital wholesale bank licenses that would allow companies to lend to small and medium-sized businesses, which frequently struggle to find funding sources.

Digital wholesale banks would be subjected to the same regulatory requirements as existing wholesale banks, which includes a paid-up capital of S$100 million.

Companies that have publicly disclosed their applications for the digital full bank or digital wholesale bank licenses include:

Ride-hailing firm Grab and telecommunications services provider Singtel

Gaming hardware firm Razer and its consortium of partners

Ant Financial, which runs Alibaba’s massive Alipay digital payment service

Fintech firm V3 Group along with local card and payments company EZ-Link

Tech firm Advance.AI, along with Hong Kong-listed financial services firm Sheng Ye Capital and PhillipCapital

Fintech company iFast, along with its Chinese partners Yillion Group and Hande Group

The latest company to disclose its application on Tuesday was the U.S. listed internet company Sea, which owns the Southeast Asian e-commerce platform Shopee.