Singapore is taking a big step forward in fintech with the opening of digital bank license applications by the Monetary Authority of Singapore (MAS), allowing non-bank players to enter the market and serve consumers and businesses for the first time.
MAS will be awarding a total of five licenses: two digital full bank licenses which allow licensees to serve retail customers and take deposits, and three digital wholesale bank licenses to serve SMEs and non-retail segments.
Since this move was announced in June 2019, we’ve followed a slew of companies that have expressed their interest to apply.
It also became evident that some of these hopefuls would have to join forces in order to strengthen their chances, due to MAS’ high capital requirements and strong emphasis on profitability.
Digital full banks must meet a minimum paid-up capital of S$1.5 billion, and must be headquartered in Singapore and managed by Singaporeans.
Digital wholesale banks on the other hand, need a lower capital requirement of S$100 million, and can be helmed by foreign firms.
Applicants must also be able to show a path towards profitability through a five-year financial projection.
After applications closed on the last day of 2019, MAS revealed today (7 January) that they received a total of 21 applications, including seven biddings for digital full bank licenses and 14 for digital wholesale bank licenses.
The regulator will issue licenses to five successful applicants by mid-2020.
Here are the ones we know about so far, and what we think they could potentially offer. We will continue to update this list as more announcements are made.
Grab And Singtel
Ride-hailing firm Grab and telco Singtel jointly applied for a digital full bank license, holding a 60% and 40% stake in the consortium respectively.
According to them, they aim to meet the needs of “digital-first consumers” who expect greater convenience and personalisation.
Besides retail customers, they also want to serve SMEs that are facing a lack of access to credit.
The firms consider this a natural extension of their core operations, as they both have been dabbling in fintech with products like their mobile wallets, GrabPay and Singtel Dash.
If they become a digital full bank, we could see Grab possibly adding a range of financial services to boost the offerings on their ‘super app’, enabling many users to conveniently manage their finances within the Grab app.
With their network of F&B merchants on GrabFood, it’s also possible that they might roll out products like business loans to increase their support for the small businesses they work with.
Razer Youth Bank
Razer Fintech is leading a consortium made up of supermarket operator Sheng Shiong, insurance firm FWD, Internet firm LinkSure Global, automotive marketplace Carro, and tech venture fund Insignia Ventures Partners.
Razer takes a 60% majority stake, while the other partners hold the remaining equity interest.
Called Razer Youth Bank, they have applied for a digital full bank license and are aiming to cater to “underserved youth and millennials” through the innovative use of technology.
Razer has been working on RazerPay since its announcement early last year, and we have yet to see a full launch in Singapore.
Regardless, the firm has been beefing up its capabilities by securing a partnership with Visa to enable payments at over 54 million merchants worldwide, and develop a virtual prepaid solution.
Along with its diverse partners, it seems like Razer Youth Bank might be planning to spread out across as many verticals as possible.
Admittedly, some of the partners in this group came as a surprise to us. With firms like Sheng Shiong and FWD in the mix, for example, perhaps we might see exclusive benefits like discounts on groceries and insurance products for Razer Youth Bank’s customers.
The inclusion of Carro could also allow them to offer car insurance and financing solutions for car buyers.
In fact, Razer said it also has tie-ups with other companies beyond the above partners, such as coworking firm JustCo and travel booking platform SkyScanner, to provide “bespoke” services for youths.
Another diverse consortium bidding for a digital full bank license, Beyond includes property developer Far East Organisation, Singapore Business Federation (SBF), Sumitomo Insurance Co, and Temasek’s Heliconia Capital.
Beyond is led by EZ-Link and V3 Group, which manages lifestyle brands like OSIM and TWG.
This consortium seems to be a pretty formidable one so far with the participation of huge names in property, insurance and investment.
EZ-Link is also a very familiar name, as its stored-value cards have played a part in daily life for every Singaporean when it comes to transport and retail payments.
On top of that, having SBF on their team opens Beyond to an extensive network of local companies, who will probably welcome the added support of new funding options for their business needs.
Alibaba Group’s Ant Financial (formerly known as Alipay) is going solo as it seeks a digital wholesale bank license.
For the Chinese heavyweight contender, it would mean an expansion of their global reach, after they previously secured virtual bank licenses in China and Hong Kong.
Ever since their expression of interest to apply in Singapore, Ant Financial seems to be focused on the wholesale banking sector, citing that it would be easier to meet the requirements.
Many local merchants already accept Alipay as a payment option here, so perhaps Ant Financial may tap on this network to ramp up its offerings between business-to-business.
Alibaba’s ownership of Lazada may also bolster Ant Financial’s capabilities to reach even more merchants online.
iFast Corporation, Hande And Yillion
iFast Corporation, a Singapore-based mainboard listed wealth management firm, has applied for a digital wholesale bank license together with two Chinese fintech firms, Hande Group and Yillion Group.
Hande Group was founded by the former president of China’s first virtual bank WeBank, while Yillion Group currently holds one of four digital bank licenses in China.
The consortium reportedly plans to target the underserved SME sector in Singapore.
Sheng Ye Capital, Phillip Capital And Advance.AI
Another applicant for a digital wholesale bank license is a consortium consisting of all Singapore-owned firms — supply chain finance company Sheng Ye Capital, financial conglomerate Phillip Capital, and Advance.AI, which uses AI technology to perform credit scoring and fraud detection for banks and businesses.
Their aim is to build a “data-driven, next-generation bank” for SMEs, which will support Singapore businesses to expand into Asia.
Two of the three, Sheng Ye Capital and Advance.AI, are backed by Temasek’s Pavilion Capital.
AMTD, Xiaomi Finance, SP Group And Funding Societies
Hong Kong financial services group AMTD leads another consortium seeking a digital wholesale bank license.
It includes the financial arm of Chinese electronics company Xiaomi, local utilities provider SP Group, and peer-to-peer lending platform Funding Societies.
AMTD and Xiaomi have previously secured a digital bank license together in Hong Kong.
If successful in Singapore, the consortium wants to connect startups and SMEs at all stages of growth to capital markets, and help them expand into other parts of Asia.
Alongside financing solutions, they could also offer Internet of Things (IoT) platforms that businesses can tap on to increase efficiency.
US-listed consumer internet company Sea also announced its application for a digital full bank license, which it is bidding for alone.
Besides being the parent company of game publisher Garena and e-commerce platform Shopee, Sea also runs a digital financing services arm SeaMoney.
SeaMoney provides e-wallet, payment processing, micro-lending and other digital financial services that leverage a large user base and wealth of high-quality data across Sea’s platforms.
Similarly to other digital full bank license hopefuls, the firm’s core focus is on “addressing the unmet needs of millennials and SMEs in Singapore”.
Enigma Group, Qrypt Technologies, 2359 Media, Blockchain Worx And Enigma Global Holdings
Singapore-based analytics and consultancy provider Enigma Group is now the fifth identified applicant for a digital full bank license.
It leads a consortium comprising other local companies, cybersecurity firm Qrypt Technologies, mobile app developer 2359 Media, and fintech startup Blockchain Worx.
They’re also joined by UK-based Enigma Global Holdings, which recently agreed to acquire an existing challenger bank in UK.
Enigma and its consortium will focus on serving underbanked SMEs and the fast-evolving digital workforce.
The group’s collective experience in financial services and emerging technologies can help them “leverage leading-edge technology and best practices from similar mature markets to address digital banking needs back home in Singapore”.
MatchMove, Singapura Finance, Lightnet And OpenPayd
Singapore-based digital payments firm MatchMove has confirmed their bid for a digital full bank license on 19 March 2020, leading a consortium including Singapura Finance, Lightnet and OpenPayd.
With its digital wallet and ‘Banking-as-a-Service’ platform, MatchMove said it is “already acting like a digital bank” in many ways.
The company added that it will leverage its existing capabilities to “address current pent up demand and reach digitally underserved segments like SMEs and gig workers”.
For Singapura Finance, a 70-year-old bank in Singapore, the bid is part of its strategic move into “the financial technology era”. It previously invested US$5 million for a 1.6% stake in MatchMove.
With Singapura Finance’s wide range of personal and corporate banking services, and MatchMove’s digital solutions, they would be well poised to serve both retail customers and businesses.
Arival, created by Singapore-based venture capital firm Life.Sreda, revealed its bid for a digital wholesale bank license on 14 January 2020.
It intends to serve the “abnormal” customers, which it defines as higher-risk clients who typically get rejected by traditional banks, including blockchain and crypto businesses, online businesses and coworking spaces.
Arival believes this precise focus will differentiate itself from other players who are taking on broader strategies to provide something for every customer.
If successful, it plans to curate a host of fintech services from third-party providers on one banking platform, and offer these services to help fintech startups launch rather than compete with them.
Arival is also seeking a US-based international banking license in Puerto Rico.
Greenland Financial And MinIPO
Greenland Financial, the investment arm of Chinese real estate developer Greenland Group, is gunning for a digital wholesale bank license in Singapore.
Reports said Greenland has applied under a consortium with partners including Chinese financing platform MinIPO.
It has not revealed other members of the consortium, but said they will be a strong combination of large-scale state-owned enterprises and fintech leaders in China.
Greenland also intends to work with top academic institutions in Asia to develop AI technology and financial risk management to boost the digital wholesale banking sector.
Zall Smart Commerce Group, Marubeni Corporation And Global eTrade Services
Chinese ecommerce company Zall Smart Commerce Group announced its bid for a digital wholesale bank license on 21 January 2020.
Zall leads a consortium together with Japanese trading firm Marubeni Corporation, and local supply chain platform Global eTrade Services (GeTS).
Zall is a Hong Kong-listed company, and also runs Z-Bank, one of the top five digital banks in China serving over 12 million retail customers and SMEs.
With the partners’ combined regional presence across China, Japan and Southeast Asia, the consortium could provide SMEs with growth insights, sustainable financing, and help them expand into Asia.
Zall has previously collaborated with Marubeni and GeTS in Singapore, and would be on their fourth major project here if their application is successful.