A consortium of ride-hailing firm Grab and Singapore Telecommunications as well as an entity wholly owned by Chinese fintech giant Ant Group are among the winners of Singapore’s first digital bank licenses.

The Monetary Authority of Singapore (MAS) announced on Friday (December 4) that the Grab-Singtel consortium and internet platform provider Sea Limited will be granted digital full bank licences while Ant Group and a consortium comprising Greenland Financial Holdings, Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management will be awarded digital wholesale bank licences.

Unlike traditional banks which have physical branches and also offer digital banking services, a digital bank provides online-only banking services. A digital full bank licence allows the holder to offer services to retail customers as well as companies while a digital wholesale bank only serves companies and small and medium enterprises.

The MAS said the successful applicants must meet all relevant prudential requirements and licensing pre-conditions before it grants them their respective banking licences. The central bank expects the new digital banks to commence operations by early 2022. 

“MAS applied a rigorous, merit-based process to select a strong slate of digital banks. We expect them to thrive alongside the incumbent banks and raise the industry’s bar in delivering quality financial services, particularly for currently underserved businesses and individuals. They will further strengthen Singapore’s financial sector for the digital economy of the future,” MAS managing director Ravi Menon said.

Grab and Singtel formed their consortium in December 2019 to apply for the licence. Grab has a 60% stake in the group with Singtel holding the rest. The former head of Citibank Singapore’s retail banking business Charles Wong is chief executive of the consortium.

Commenting on the MAS announcement, Wong said: “An opportunity such as today, where we are entrusted to develop a digital bank from scratch, is truly rare. We will redefine banking by building a sustainable business focused on out-serving Singapore with personalised, accessible and trusted financial products.”

With their well-established position in the consumer market, Grab and Singtel believe they will be able to offer differentiated financial services that address the underserved needs of the country’s consumer and enterprise segments.

The generational transfer of earning power to younger, digital-savvy and digital-first consumers could also see the consortium well-positioned to offer its online-only products and services.

While Singapore’s triumvirate of long-standing local banks – DBS, OCBC and UOB – welcomed the newcomers, they also served notice that the established players are up for the fight.  

Shee Tse Koon, Singapore country head at DBS Bank, said: “We congratulate the successful applicants and welcome them to our world, where digital banking is already a reality. We believe that the new entrants will spur us all on to do better and we will continue to focus on making banking more intuitive and invisible so that our customers can live more and bank less."