Singapore’s first digital banks: What services can you expect

SINGAPORE - The winners of Singapore's first digital bank licences were revealed on Friday (Dec 4). This means that for the first time here, non-banks will be allowed to provide banking services.

Digital full bank licences went to the Grab-Singtel consortium and tech giant Sea. 

The Monetary Authority of Singapore also granted digital wholesale bank licences to Jack Ma’s Ant Group as well as a consortium comprising Greenland Financial Holdings, Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management. 

The eagerly awaited announcement, expected in June, was delayed after the assessment period for the award was extended due to the Covid-19 pandemic.

At stake were five digital bank licences, which included up to two full bank licences and up to three wholesale bank licences.

1. What's a digital full bank?

A digital full bank can serve both retail and corporate customers.

Like any traditional bank, it can provide ordinary Singaporeans with services like having an account, deposits, loans, debit and credit cards, payments and investment products.

But all banking services will be done online, with the digital bank not having a physical branch or ATMs.

This is different from having traditional banks put some banking services online via the Internet or mobile apps.

2. What's a digital wholesale bank?

They will serve non-retail customers only, like small and medium-sized enterprises.

3. How were the winners chosen?

A total of 21 applications were submitted for the licences and 14 were shortlisted.

The bidders included e-commerce companies, tech and telco firms, and fintechs such as crowdfunding platforms and payment services providers.

The winners were judged on the following criteria:

- Their value proposition and business model

- The sustainability of their digital banking business

- Their innovative use of technology

- Growth prospects and other contributions to Singapore's financial centre

4. How will Singaporeans benefit from digital banks?

Higher interest rates: With less overhead, branchless digital banks may offer higher rates on deposits.

Lower fees for financial products are also likely, as there will be no middleman used.

Under-served groups in Singapore like entrepreneurs and micro enterprises can be better reached with the lower costs of digital banks. They may offer the opening of deposit accounts without a minimum amount, for example, or adopt a different credit risk assessment approach.

More convenience for customers, with all banking services at their fingertips 24/7.

More personalised services, for example with product recommendations, can also be provided, with the use of technology to gather and mine data.

More innovative services can also be offered due to more competition, with banking opened up to non-bank players.

5. Any downsides?

Possible drawbacks include:

- Technology and service interruptions

- Security and identity theft concerns

- Lack of personal banker relationship

6. Do other countries have digital banks?

They are not new. Here are some examples around the world:

- Alibaba's MYbank and Tencent's WeBank in China

- SBI Sumishin Net Bank in Japan

- Kakao Bank in South Korea

- Neat in Hong Kong

- Timo in Vietnam

- Up Bank in Australia

- Starling Bank in Britain

- Chime in the United States

- Doconomy in Sweden