Singapore digital bank licence: A breakdown of the contenders

The competition for digital banking licences in Singapore is heating up, with a total of 21 companies officially in the mix, the Monetary Authority of Singapore has revealed.

Singapore’s central bank said a majority of the applicants were consortiums made up of companies, with seven of them seeking full digital banking licences, and 14 vying for wholesale digital banking licences.

MAS said it will announce the successful applicants in June 2020.

What is the digital bank licence?

There are a total of five permits up for grabs – two full digital banking licences and three wholesale digital banking licences.

A digital full bank licence will allow the planned entity to provide a wide range of financial services, while also accepting monetary deposits from both retail and institutional customers.

Under the scheme, the approved licensees will commence operations on a limited basis for the first one to two years, with a minimum paid-up capital of S$15 million, an aggregate deposit ceiling of S$50 million, as well as deposits per individual capped at S$75,000.

Licensees will then become fully operational - in which all deposit caps are lifted - from the third year on, once a minimum paid-up capital amount of S$1.5 billion is reached.

Digital wholesale banks will have a minimum paid-up capital of S$100 million, and will have the same capital and liquidity rules as traditional wholesale banks.

They will not be able to take Singapore dollar deposits from individuals, except for fixed deposits of at least S$250,000. It is only permitted to open and maintain business deposit accounts for small and medium enterprises, and corporate accounts.

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Who are the companies that have applied?

Digital bank full licence

Below is the list of full digital banking licence applicants:

Grab and Singtel

IG first reported on 30 December that Singapore Telecommunications Limited (Singtel) and Singapore-based internet company Grab had joined forces to bid for a full digital banking licence.

Both companies had said in a joint statement that they hope to set up a full-service digital bank with an ‘aim to cater to the needs of digital-first customers, who have come to expect greater convenience and personalisation’, including small and medium-sized enterprises.

Grab, which is fully privatised, will hold a 60% majority stake in the consortium, and Singtel with the remaining 40%.

Singtel share price rose to a three-week high of S$3.40 per share as of Monday 30 December at 11.25am, following the announcement.

Razer, Sheng Shiong Holdings, LinkSure Global, Carro, FWD Group, and Insignia Ventures Partners

On 02 January, 1337-HK also confirmed that it had submitted an application for a full digital banking licence to the Monetary Authority of Singapore, through a consortium formed with grocery chain Sheng Shiong Holdings, internet network company LinkSure Global, automotive marketplace Carro, insurance firm FWD Group, and VC firm Insignia Ventures Partners.

The application included a proposal to form a millennial-targeted digital bank called Razer Youth Bank, with Razer holding a 60% majority stake.

This would be Razer’s foray into the finance industry in Singapore. In Malaysia, the company already owns an e-wallet app called Razer Pay that allows users to pay merchants and transfer funds.

Razer share price rose 4.35% to a two-month high of HK$1.39 per share the next day.

V3 Group, Far East Organisation, Singapore Business Federation, EZ-Link, MSIG Insurance Singapore and Heliconia Capital Management

Also seeking a full licence is Singapore luxury lifestyle company V3 Group Limited, which owns massage chair brand OSIM and upmarket café chain TWG Tea.

The company has joined forces with five other companies to form a consortium called Beyond. It includes property developer Far East Organisation, commerce chamber Singapore Business Federation, transport card company EZ-Link Private Limited, insurance firm MSIG Insurance Singapore, and Temasek Holdings subsidiary and investment firm Heliconia Capital Management.

Beyond plans to offer ‘micro-insurance’ coverage to consumers, as well as credit facilities to local SMEs to help with their expansion efforts across the region.

Group chairman-designate Gan Chee Yen said the consortium is made up of companies who ‘have in-depth experience in risk management and digital banking operations in the UK and North Asia’, adding that the proposed digital bank hopes to be ‘inclusive, fair, and equitable’.

Sea Company

The Wall Street-listed Sea Company, which owns digital entertainment brand Garena and e-commerce platform Shopee, has also thrown its hat into the ring.

The internet company is no stranger to the fintech space, having operated e-wallet AirPay in Thailand, Vietnam and Indonesia since 2017, as well as ShopeePay and Shopee PayLater across the greater region.

These services fall under a wider digital financial services arm called SeaMoney, which also offers products and services like payment processing and micro-lending.

Forrest Li, Chairman and Group CEO said in an official statement:

‘As the largest US-listed internet company from Southeast Asia, we already have hard-wired in our operations the rigorous standards of corporate governance that will be essential to running a successful digital bank, and the robust financial strength to support our long-term commitment to this initiative.’

Following the update, Sea Company share price rallied to an all-time high of US$41.80 per share that very day on 07 January.

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A total of seven permits - two digital full bank licences and three digital whole bank licences - are up for grabs (Source: Bloomberg)

Digital wholesale bank licence

A total of 11 entities have submitted bids for the wholesale digital banking licence.

iFast Corporation, Yillion Group, and Hande Group

Singapore Exchange-listed wealth management fintech specialist iFAST Corporation has partnered up with Chinese digital financial companies Yillion Group and Hande Group to bid for a wholesale digital banking licence.

Yillion currently owns one of only four digital banks in China, while Hande is a fintech company that has links to Tencent Holdings Limited through its founder.

Following the reports, iFast Corporation’s share price rose 2.9% on 07 January.

Ant Financial

Another player who is no stranger to the digital finance industry is Ant Financial, a fintech company based in Hangzhou, China. The company, which Alibaba Group Holding Limited has a 33% stake in, stated that it has applied for a wholesale digital banking licence.

Ant Financial operates Alipay, the world’s largest mobile payment gateway. The platform counts more than 900 million users as of December 2019.

AMTD Group, Xiaomi, Funding Societies, and SP Group

Leading the pack in this consortium is Hong Kong financial services firm AMTD Group, who hopes to leverage on the IoT knowledge of Chinese gadget maker Xiaomi Corporation, the loan facilitation expertise of Funding Societies, and the sustainability-focused business model of SP Group.

AMTD CEO Calvin Choi told The Business Times last October that he sees the digital bank licence ‘as a great opportunity to serve more Asian customers’.

Advance.AI, Sheng Ye Capital, and PhillipCapital

Singapore-based tech firm Advance.AI has submitted a proposal with the help of Hong Kong-listed financial services company Sheng Ye Capital and Singapore’s Phillip Capital.

Advance.AI chief marketing officer Mi Li told The Business Times that she sees the permit as ‘an opportunity for us to impact an under-served segment’, adding that ‘Singapore SMEs often find it impossible to get the credit they need to grow their business’.

ByteDance

ByteDance, which owns social media app sensation TikTok, has been in the headlines recently for an upcoming IPO planned for 2020.

The company is, according to the media, the world’s most valuable startup presently, commanding a $75 billion market valuation. TikTok, an app that allows for sharing of short video content, is available in over 150 markets and 75 languages. It achieved one billion downloads in February 2019.

Stay tuned to IG.com for all the latest updates from the Singapore digital banking licence bids.

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