Digital bank battle hots up
Fight for digital bank license ramps up in Singapore as Malaysia moves to join digital banking club
31 Dec 2019 | Tom King
A heavyweight partnership made up of Grab, Southeast Asia’s leading so called super app, and Singapore-based communications technology group Singtel, is set to apply for a digital full bank license in Singapore.
Meanwhile in neighboring Malaysia the country’s central bank has issued a draft on a licensing framework for digital banks. Bank Negara Malaysia said in a statement that up to five licenses may be issued to qualified applicants to establish digital banks to conduct either conventional or Islamic banking business in Malaysia.
Hong Kong was the first mover in the region to grasp the nettle on licensing digital banks. Under the regulatory umbrella of the Hong Kong Monetary Authority, a number of online lenders are set to commence business in 2020.
News of the Grab-Singtel consortium will no doubt resonate with the triumvirate of long-standing local Singaporean banks DBS, OCBC and UOB who might now see the potential new entrant as a serious disruptor.
With their deep well-established penetration into the consumer market both Grab and Singtel will be able to introduce a differentiated financial services offering that addresses the unmet and underserved needs of both the consumer and enterprise segments in Singapore.
The generational transfer of earning power in the city-state which is swinging towards the younger digital savvy and digital-first consumers, means the consortium will be well-positioned to offer relevant online only products and services.
The regulators justification for the new licensing bands is to ensure banking products and services are offered that address the market gaps in the underserved and unserved segments.
Such offers could include those traditional banks might decline including smaller loans over shorter periods.
The digital banks which will operate online without having physical branches, should also be open for their customers on a 24/7 basis.