MAS considering Virtual Banking License for FinTech firms
The Monetary Authority of Singapore (MAS) said on Tuesday it is reviewing whether to offer digital-only banks that have emerged out of FinTech firms a virtual banking license.
Since 2000, Singapore-incorporated banks have been allowed to establish banking subsidiaries to pursue digital-only business models. Both local and foreign banks have been actively developing their online offerings in cooperation with FinTech companies. Following that, these non-bank firms have started setting up digital-only banks.
An MAS spokesman said “MAS is studying whether to admit such digital-only banks with non-bank parentage. 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.”
This issue is being raised after Honk Kong started issuing virtual licenses, but they only concern firms that have partnered with financial institutions. In Singapore, banks have already been offering digital-only services, and expanded in the region using digital-only strategies. For instance, DBS launched Digibank India in April 2016 and has already acquired over 2.5 million customers. A year later, DBS introduced Digibank Indonesia in half the time expected, and has acquired more than 460,000 users since.
Dennis Khoo, head of group retail digital in UOB, said that the future of banking in the digital world will be shaped by how banks can offer a differentiated customer experience.
He added that banking goes beyond technology; FinTech firms must ensure that they have all the elements and responsibilities of risk management and regulatory compliance in place to offer banking services.
Setting up a new bank involved risks, such as cyber security or Know-Your-Customer (KYC) on-boarding, which are to be considered while thinking about offering a virtual bank license to non-bank entities.
Date: 8th May 2019
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