MAS announced its intention to accept applications for new digital bank licenses until December 31, 2019. The new digital bank licenses, which will be extended to non-bank players, will ensure that the banking sector in Singapore continues to be resilient, competitive, and vibrant. MAS expects to announce the successful applicants in mid-2020. The successful applicants will be expected to commence business by mid-2021.
Digital full banks will be allowed to take deposits from and provide a wide range of financial services to retail and non-retail customer segments while digital wholesale banks will be permitted to serve small and medium enterprises and other non-retail segments. The new digital banks are in addition to any digital banks that Singapore banking groups may already establish under MAS’ existing regulatory framework. To be considered for a license, applicants must first meet the eligibility criteria for business track record, fit and proper shareholders, directors and management, capital commitment, a clear value proposition, and a sustainable business model. Applicants for a digital full bank license must additionally be anchored in Singapore, controlled by Singaporeans, and headquartered in Singapore. Eligible applicants will then be assessed for the following:
- Value proposition of the business model, incorporating the innovative use of technology to serve customer needs and reach under-served segments of the Singapore market that differentiates it from existing banks. MAS will also consider the ability of the applicant to implement the proposal.
- Ability to manage a prudent and sustainable digital banking business, including the level of understanding of key risks in banking business and the strength of regulatory compliance and risk management plans. MAS will also consider the reputation, track record, financial strength, and commitment of the shareholders of the applicant.
- Growth prospects and other contributions to financial center in Singapore, such as the jobs the entity will be bringing to Singapore, its commitment to develop the skills of the local workforce, the capabilities (including technology) it will be locating in Singapore, the headquarter functions it will be anchoring here, and its regional expansion plans.
Keywords: Asia Pacific, Singapore, Banking, Digital Banks, Bank Licenses, Fintech, Non-banking Institutions, MAS
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