S'pore sees big interest in digital bank licences, Latest Business News - The New Paper

S'pore sees big interest in digital bank licences

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Impact could be huge if licensed firms use city-state as gateway to region

Singapore is opening up its banking industry to digital lenders in a reform that could shake up the sector across South-east Asia, with Chinese billionaire Jack Ma and ride-hailer Grab among those seeking licences.

The introduction of digital lenders into the Singaporean market heralds the biggest liberalisation of the financial hub's banking sector for two decades, and follows similar moves in the United States, Britain, Japan and Hong Kong, among others.

With most adults in the city already having access to financial services, firms awarded licences are likely to use the city-state as a gateway to the wider region, where many consumers still lack bank accounts.

"It's a total reconfiguration of the terrain - we're talking about radical changes," Professor Lawrence Loh at the National University of Singapore Business School, told AFP.

"Singapore is the launchpad for South-east Asia."

An eclectic group of 21 applicants are vying for five digital banking licences, Singapore's central bank and financial regulator said this month.

They range from Alibaba founder Ma's online platform Ant Financial, as it ramps up efforts to expand outside China, to a consortium that includes South-east Asian ride-hailing behemoth Grab and the region's biggest telecom player, Singtel.

The winners will be announced in June, with operations starting next year, the Monetary Authority of Singapore said.

Observers say the overhaul is unlikely to spark immediate, dramatic changes in Singapore itself - where traditional banks such as DBS Bank and United Overseas Bank have already introduced digital services.

But the future impact could be massive if the new online lenders expand across a region of more than 600 million people, which is home to booming economies and where many are getting access to the Internet for the first time via smartphones.

The opportunities appear huge - nearly a third of people in South-east Asia still do not have bank accounts, according to a report by Google, Singapore investment firm Temasek and business consultancy Bain & Company.

And it projected digital lending in the region would rise five-fold to US$110 billion (S$148.4 billion) by 2025.

The roll-out worldwide of ultra-fast, 5G smartphone infrastructure over the next five years is also expected to accelerate the digital transformation, said Mr Rajiv Biswas, Asia-Pacific chief economist at IHS Markit. - AFP