Singapore’s digital bank contenders: Who they are and what they bring to the table

The Monetary Authority of Singapore (MAS) is currently deliberating the 21 applications it’s received for digital bank licenses in the city-state. These include seven digital full bank license bids from entities that are looking to serve both retail and non-retail customer segments and another 14 groups vying for wholesale banking licences to target small and medium-sized enterprises.

The applicants came from a diverse group, ranging from e-commerce firms, technology and telecom operators, fintech companies to financial institutions, MAS said in a statement. With the regulatory body only issuing up two full digital banking and three wholesale digital banking licenses, it’s a tight race – only those that are able to build a viable, profitable business in the long run will come out on top.

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“We see an emerging trend of finlife – [the] coming together of financial services and lifestyle to enable seamless customer experience and innovative financial products,” Varun Mittal, global emerging market fintech lead at Ernst & Young, tells Tech in Asia. Despite this, Mittal says that a large proportion of these new digital banks have yet to become profitable and will likely face a whole host of challenges.

Among which is attracting depositors (which will likely require an aggressive marketing effort) and gaining access to capital in an already well-banked market of just 5.6 million retail customers. These players will go up against incumbent banks which have the financial muscle to build new capabilities on top of existing banking infrastructure should they choose to do so.

Newcomers will have the potential to reinvent banking through tech applications. What exactly these might entail haven’t been made known, but examples could include microinsurance products tagged to food deliveries or movie tickets, Mittal suggests.

Many are already joining forces, reeling in help from ecosystem partners to form consortia – some having as large as six parties – to maximize parameters such as distribution reach, capital, technological capabilities, as well as regulatory know-how.

Successful applicants will be announced in mid-2020 and are expected to commence operations by mid-2021.

Full digital banking license contenders:

Enigma Group-led consortium

Who: Singapore-based Enigma Group handles securities dealings on its own accounts as well as security and commodities contract dealings. It’s also involved in a Swiss wealth management business, the company said in a statement.

Consortium partners: Singapore-based cybersecurity firm Qrypt Technologies, mobile app developer 2359 Media, and blockchain-focused fintech startup Blockchain Worx. It also includes UK-based Enigma Global Holdings, which recently signed up to acquire ownership of an unnamed UK challenger bank.

Challenger banks – like Revolut and MyBank – are digital banks that leverage technology to streamline retail banking.

Value proposition: The consortium will focus on serving underserved SMEs and the growing digital workforce.

Competitive advantage: The group has experience in financial services operations in Europe, which “will help us leverage technology and best practices from similar mature markets to address digital banking needs back home in Singapore,” Samuel Heng, the designated chairman of the consortium, said.

Grab-Singtel consortium

Razer Youth Bank led by Razer Fintech

Sea

Singapura Finance and MatchMove 

V3 Group and EZ-Link-led Beyond consortium

AMTD-led consortium

Ant Financial

Arival Bank

Bytedance technology

IFast-led consortium

Temasek-backed Sheng Ye Capital-led consortium