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Monday, December 07, 2020, 18:07
Ant, Grab become 1st tech firms to run banks in Singapore
By ​Bloomberg
Monday, December 07, 2020, 18:07 By ​Bloomberg

This photo taken on Oct 13, 2020 shows the headquarters of Ant Group Co in Hangzhou, in China's eastern Zhejiang province. (PHOTO / AFP)

Ant Group Co and a venture led by Grab Holdings Inc won licenses to run digital banks in Singapore, paving the way for the technology giants to expand their financial services in the Southeast Asian hub.

Sea Ltd is also among the four winners announced Friday by the Monetary Authority of Singapore (MAS) after almost a year of deliberation. A consortium involving China’s Greenland Financial Holdings Group Co is the other successful candidate.

The permits are coveted given Singapore’s status as a rapidly growing wealth management center and a gateway to Southeast Asia, where the digital lending market is expected to quadruple in five years

Singapore joins the UK and Hong Kong in opening up its banking system to purely digital entrants, as it seeks to inject innovation and competition into a market dominated by traditional lenders. The permits are coveted given the city’s status as a rapidly growing wealth management center and a gateway to Southeast Asia, where the digital lending market is expected to quadruple in five years.

ALSO READ: Jack Ma's Ant Financial joins Singapore digital banking race

“Following a very competitive digital banking license process in Hong Kong recently, digital banks in Singapore will now be one of the first to capitalize on the booming Southeast Asia market,” said Mark Robinson, technology sector lead partner for Asia Pacific at Herbert Smith Freehills in Singapore. “Other countries in the region will follow suit, including Malaysia, as financial services continue on the path to further liberalization and greater digitization.”

Digital full banks will be allowed to take deposits and provide banking services to both retail and corporate customers. Digital wholesale banks can only target small and medium-sized businesses and other non-consumer segments. They are expected to start operating from early 2022, MAS said.

“MAS applied a rigorous, merit-based process to select a strong slate of digital banks,” Managing Director Ravi Menon said in a statement. “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.”

MAS, which had previously said it may grant as many as three wholesale licenses, said it will review whether to issue more in the future. The authority also said it had taken into consideration the impact of COVID-19 on the business plans and projections of applicants.

Fresh competition

The entrants will provide fresh competition for lenders such as DBS Group Holdings Ltd. While more than 90 percent of Singapore’s adult population have bank accounts, the newcomers are likely to target segments including unsecured personal loans, as well as small and medium-sized firms that may not have good access to financing.

READ MORE: iFast, Chinese partners submit Singapore digital license bid

Ant has potential to serve small and medium-sized businesses through “a truly digital transformation,”Chief FinTech Officer of the Monetary Authority of Singapore Sopnendu Mohanty said

MAS Chief FinTech Officer Sopnendu Mohanty said in a Bloomberg Television interview Monday that Ant has potential to serve small and medium-sized businesses through “a truly digital transformation,” he said.

In a statement, Ant touted its “substantial experience and proven success” working with partner financial firms to serve SMEs. “We look forward to building stronger and deeper collaborations with all participants in the financial services industry in Singapore,” it said.

Singtel role

Grab is teaming up with Singapore Telecommunications Ltd on its digital bank, through a majority-owned entity. The venture plans to hire 200 people ahead of the debut, Charles Wong, who will lead the bank as chief executive officer, said Friday. The lender has recruited 10 percent to 15 percent of its planned workforce so far, he said.

Sea, worth about US$98 billion, is the most valuable company in Southeast Asia. Shares of the gaming and online shopping giant closed 8.3 percent higher in New York on Friday, their biggest gain in almost four months.

ALSO READ: Traditional, virtual banks square off in battle for tech-savvy customers

Greenland Financial is the investment arm of Chinese state-owned real estate developer Greenland. Its consortium includes Linklogis Hong Kong Ltd and Beijing Co-operative Equity Investment Fund Management Co.

The announcement was made ahead of the Singapore Fintech Festival, one of the year’s biggest state-sponsored conferences, that starts Monday.


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