21 Applications Received for Singapore’s Digital Banking Licenses

January 2020

Applications for Singapore’s digital bank licenses closed on 31 December, 2019. The Monetary Authority of Singapore (MAS) announced in June 2019 that it will issue up to five new digital bank licenses, including: 1) up to two digital full bank licenses, which allow licensees to provide a wide range of financial services and take deposits from retail customers; and 2) Up to three digital wholesale bank licenses, which allow licensees to serve SMEs and other non-retail segments. A full bank has to meet a minimum paid-up capital requirement of SGD 1.5 billion (USD 1.1 billion), while the capital requirement for the wholesale bank is SGD 100 million (USD 74 million). The full bank entities need to be Singaporean-controlled, while the wholesale digital banks can have majority foreign stakes.

A total of seven applications were received for the digital full bank licenses and 14 for the digital wholesale bank licenses. The majority of the applications were made via consortiums and the members of these consortiums include e-commerce firms, telecommunications companies, fintechs and financial institutions. MAS is expected to announce the results of the digital banking applications by mid-2020.

Applicants for the digital full bank licenses include the following:

  • Gaming hardware and esports company Razer, via a consortium that includes supermarket operator, Sheng Siong Holdings; insurance firm FWD; venture firm, Insignia Ventures Partners; mobile internet company LinkSure Global; and vehicle marketplace, Carro, has applied for a full bank license. Razer operates a mobile wallet called RazerPay in Singapore and Malaysia. Razer’s fintech business will have a 60% stake in the consortium and it is seeking to target millennials millennials and youth, along with budding entrepreneurs, and small- and micro-enterprises that find it hard to access capital.
  • Leading ride hailing company in South East Asia, Grab and Singapore’s largest telco, Singtel have jointly applied for a license, with Grab owning 60% and Singtel holding the remainder. Singtel has entered into areas such as mobile wallets and online gaming, while Grab has expanded its operations from ride-hailing into food delivery and a range of financial services. Singtel provides an e-wallet called Dash, while Grab operates GrabPay.
  • Sea Limited, which owns leading regional e-commerce platform Shopee and game developer Garena, is the only known solo applicant.
  • A consortium led by lifestyle and fintech enterprise V3 Group (which owns two leading luxury brands — OSIM and TWG Tea) and EZ-Link which provides contactless smart card used for the payment of public transportation fares in Singapore, is seeking a digital full bank license. Called Beyond, the consortium also comprises private property developer Far East Organization, the Singapore Business Federation (SBF), insurer Mitsui Sumitomo Insurance (MSIG) and Temasek subsidiary Heliconia. The group aims to focus on the needs of SMEs, which employ nearly 70% of Singapore’s workforce. It will take an industry specific approach, reaching out to companies and individuals in areas such as real estate, construction, mass transport, insurance and retail.

Applicants for the wholesale bank license include the following:

  • Singapore Exchange Mainboard listed company, iFast which provides investment solutions and has assets under administration of around USD 10 billion, has partnered with China-based companies Yillion Group and Hande Group, to apply for a wholesale bank license. Yillion operates one of the four digital banks in China and has leading Chinese Internet company, Meituan Dianping, as a key shareholder. Hande Group is a fintech firm founded by Dr Cao Tong, former president of Webank, China’s first digital bank.
  • Hong Kong-listed Sheng Ye Capital, a supply chain finance company founded by Singaporean Jeff Tung, has joined hands with financial conglomerate PhillipCapital and fintech firm Advance.AI. According to the Business Times, Sheng Ye has originated more than USD 6 billion worth of loans serving SMEs in China during the past five years, relying on its proprietary technology to assess risk and credit-worthiness. Sheng Ye Capital and Advance.AI are backed by Pavilion Capital, a subsidiary of Singaporean sovereign wealth fund, Temasek. The consortium aims to focus on SME segments which face challenges in accessing funding. Advance.AI brings to the table big data and artificial intelligence (AI) capabilities for fraud detection and credit scoring. All three members of the consortium are owned or led by Singaporeans, in contrast to the participation of Chinese companies in the other consortiums.
  • Crowdfunding platform for SME financing, Funding Societies and Ant Financial, the fintech arm of Alibaba, have applied for one of the licenses. Ant Financial has invested in several digital wallet operators outside China, including Paytm in India and Dana in Indonesia.
  • China-based Bytedance, which operates viral video sharing application TikTok, has also reportedly applied for a wholesale bank license. According to the South China Morning Post in late 2018, the firm had filed for a trademark in China categorized under the business of insurance and financial services.

(Sources: The Straits Times; Business Times; Channel NewsAsia)

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