Singapore's virtual banking market

"Singapore wants to be for technology players and that means anchoring them here at the early stage of their development, and allowing them access to the domestic banking market." - Ravi Menon, Managing Director, Monetary Authority Singapore

Regulation

The Monetary Authority Singapore (MAS) in June 2019 announced the issuance of five virtual banking license with the intent to focus on market segments that are typically underserved by incumbent banks. The announcement marked the way for leading financial technology, telecommunication, technology giants to become operational banks in Singapore. The effort of regulatory bodies to issue a virtual banking license is to keep pace with the fast-growing advancements in virtual banking by its neighbors, HongKong and South Korea. When making the announcement of issuing the licenses, Senior Minister Tharman Shanmugaratnam and Chairman of MAS emphasized that the regulator is committed to “allowing for greater competition and spurring innovation in finance, while it must retain strong local anchor and trust in the banking system.”

MAS is set to issue two virtual full bank licenses, which allow licensees to serve retail customers and take deposits, and three virtual wholesale bank licenses to serve SMEs and non-retail segments. In January 2020, MAS confirmed receiving a total of twenty-one applications for the five licenses, which includes seven applicants for a virtual bank license and fourteen for a virtual wholesale license.

As on date, 15 applicants are publicly known who are racing for the “big win” to be announced by mid-2020.

Current Scenario
  1. Razer Youth Bank: A consortium between Razer Fintech and Sheng Siong's founders to apply for a virtual banking license in Singapore to establish their very own Razer Youth Bank.
  2. Grab and Singtel: The consortium targets to meet the needs of “digital-first consumers” who expect greater convenience and personalization. Grab would hold a 60%stake in the proposed consortium, with the telecommunication giant holding the remaining 40%.
  3. Beyond: A consortium led by lifestyle and fintech enterprise V3 Group and card and payments company EZ-Link is seeking a virtual full bank license.
  4. Ant Financial: An affiliate of e-commerce giant Alibaba Group Holdings is seeking a digital wholesale bank license.
  5. iFast Corporation: A consortium formed between iFast Corporation (Singapore-based mainboard listed wealth management firm) and Chinese fintech firms, Hande Group and Yillion Group to obtain the virtual wholesale banking license.
  6. AMTD, Xiaomi Finance, SP Group, and Funding Societies: Hong Kong financial services group AMTD, Chinese electronics company Xiaomi, local utility provider SP Group, and peer-to-peer lending platform Funding Societies formed a consortium and applied for a virtual wholesale banking license.
  7. Sea: It is a US-listed consumer internet company, owning Shopee (e-commerce marketplace) and Garena (online game developer and publisher), and SeaMoney (a digital financial services network in Southeast Asia). Forrest Li, Sea’s chief executive officer states that they have developed exceptional capabilities in addressing these unmet needs, and have the technology, infrastructure, data analytics capabilities, and management experience to design and scale Singapore’s first fully digital bank.
  8. Enigma Group, Qrypt Technologies, 2359 Media, Blockchain Worx, and Enigma Global Holdings: A consortium formed between Singapore-based analytics and consultancy provider Enigma Group, UK-based Enigma Global Holdings, cybersecurity firm Qrypt Technologies, mobile app developer 2359 Media, and fintech startup Blockchain Worx. It has applied for a virtual full bank license.
  9. Singapura Finance and MatchMove Pay: Finance firm Singapura Finance and digital payment start-up MatchMove Pay have formed a consortium for a virtual full bank license in Singapore.
  10. Arival: Singapore-based venture capital firm Life.Sreda has applied for a virtual wholesale bank license here with the aim to serve high-risk clients that traditional banks typically reject.
  11. Greenland Financial and MinIPO: Greenland Financial, the investment arm of Chinese real estate developer Greenland Group and Chinese financing platform MinIPO have applied for a virtual wholesale bank license.
  12. Zall Smart Commerce Group, Marubeni Corporation, and Global eTrade Services: Zall Smart Commerce Group, an e-commerce-focused company in China form a consortium to apply for a virtual wholesale bank license. Along with Zall Smart, the consortium includes Japanese trading company Marubeni Corp. and Singapore-based Global eTrade Services.
  13. ByteDance: China’s ByteDance owning the viral video-sharing app TikTok, has applied for a virtual wholesale bank license.
  14. Validus Capital, Vertex Ventures, and Keppel Corporation: A consortium formed between peer-to-peer lending company Validus Capital Pte, Temasek Holding's Vertex Ventures, and Keppel Corporation applies for a virtual full bank license.
  15. ShengYe Capital, Phillip Capital & Advance AI: A consortium formed between Supply chain finance company Sheng Ye Capital, financial conglomerate Phillip Capital and AI-focused fintech firm Advance AI’s for a wholesale virtual banking license.
Topic:

The Future of Banking

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