The Monetary Authority of Singapore (MAS) announced that it will begin accepting applications for new digital bank licences. Interested parties have until 31 December 2019 to submit their applications. This follows the announcement in June 2019 by Mr Tharman Shanmugaratnam, Senior Minister and Chairman of MAS, that MAS will issue up to two digital full bank licences and three digital wholesale bank licences.

 

The requirements, spelled out on Thursday by the Monetary Authority of Singapore (MAS), state that a digital full bank must be anchored in Singapore, controlled by Singaporeans, and headquartered in Singapore. MAS plans to award the licences by the middle of next year.

Ride-hailing firm Grab is confident of meeting the digital banking licence requirements. “We are evaluating the framework and we are aware of the various criteria. We are confident we will meet the criteria to apply for the Digibank licence,” said a Grab spokesman, when asked if the SoftBank-backed firm can meet the profitability track, while being anchored in Singapore.

The new digital bank licences, which will be extended to non-bank players, will ensure that Singapore’s banking sector continues to be resilient, competitive and vibrant. Digital full banks will be allowed to take deposits from and provide a wide range of financial services to retail and non-retail customer segments, while digital wholesale banks will be permitted to serve SMEs and other non-retail segments. These new digital banks are in addition to any digital banks that Singapore banking groups may already establish under MAS’ existing regulatory framework.

 

Details of Application Process and Assessment Criteria

 

Applicants must first meet the eligibility criteria for business track record, fit and proper shareholders, directors and management, capital commitment, a clear value proposition and a sustainable business model, to be considered. Applicants for the digital full bank licence must additionally be anchored in Singapore, controlled by Singaporeans and headquartered in Singapore. Eligible applicants will then be assessed for the following:

  • Value proposition of the applicant’s business model, incorporating the innovative use of technology to serve customer needs and reach under-served segments of the Singapore market that differentiates it from existing banks. MAS will also consider the ability of the applicant to implement the proposal.
  • Ability to manage a prudent and sustainable digital banking business, including the level of understanding of key risks in a banking business, and strength of its regulatory compliance and risk management plans. MAS will also consider the reputation, track record, financial strength and commitment of the applicant’s shareholders.
  • Growth prospects and other contributions to Singapore’s financial centre, such as the jobs it will be bringing to Singapore, its commitment to develop the skills of the local workforce, the capabilities (including technology) it will be locating in Singapore, the headquarter functions it will be anchoring here as well as its regional expansion plans.

With Singapore being a small market, analysts said the prize is in tapping the larger ASEAN market. Malaysia plans to introduce a digital bank licensing framework by year-end. Other ASEAN regulators are also paying attention to digital banking developments, said Wong Nai Seng, South-east Asia leader for the Deloitte APAC Centre for Regulatory Strategy.

Applications will stay open till end of this year. MAS expects to award the licences in mid-2020, with the new digital banks expected to start operations by the middle of 2021.

Date: 30 August 2019

Argus Global specializes in regulatory compliance. We can help you determine if your company is up to date with the latest regulations with compliance reviews, and we offer as well ongoing support for all your compliance needs.

 

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