On December 4, 2020 (Taiwan time), the Monetary Authority of Singapore (MAS) issued four “digital bank licenses,” divided into two categories: “Digital Full Bank (DFB)” licenses and “Digital Wholesale Bank (DWB)” licenses. Taiwanese media generally described this as “Singapore catching up with Asia’s licensing trend.” Indeed, compared to Hong Kong issuing 10 virtual banking licenses in Q1 2019 and Taiwan issuing 3 licenses in July 2019, Singapore was certainly late to the party. But was Singapore’s later issuance really just about keeping up with the Asian trend?

Unlike Hong Kong and Taiwan, which began their application processes earlier, it wasn’t until June 28, 2019 that MAS announced it would issue up to two DFB and three DWB licenses, with applicants required to submit their proposals by December 31, 2019. When we compile the information from Hong Kong, Taiwan, and Singapore into the table below, it becomes clear that Singapore was significantly behind. So what was MAS deliberating all this time?

Country

Application Window Opened

Application Deadline

Number of Applicants

Results Announced

Hong Kong

2018/5/30

2018/8/31

33

2019/3/27

Taiwan

2018/11/15

2019/2/15

3

2019/7/30

Singapore

2019/6/28

2019/12/31

14

2020/12/4

According to a joint study by Google, Temasek Holdings, and Bain & Company, 38% of Singapore’s population is underserved by financial services, and 2% of the population is completely shut out of the banking system. The proportion of “financially unbanked” individuals is higher in Singapore compared to Hong Kong and Taiwan. Meanwhile, Nikolay Storonsky, CEO of the UK fintech company Revolut, announced well before the deadline that they would not be applying to MAS for a license due to the excessively high capital requirements. They have always positioned themselves as an “e-wallet / neo bank” rather than a “digital bank.”

In Singapore, funds stored in an e-wallet do not earn deposit interest. Similarly, users need to top up their accounts via bank transfers, and ATM withdrawals are not supported. Instead, these wallets attract users through spending rewards, more user-friendly interfaces and processes, and offer relatively more affordable insurance and lending products. Revolut is reportedly known to have over 300,000 users in Singapore.

In the next installment, we’ll continue with an introduction to the backgrounds of the companies that actually applied for digital bank licenses, and which banks ultimately won.

References: Singapore catches up with the virtual bank trend and issues 4 licenses — Ant Group and Shopee’s parent company both selected! Where is Taiwan in this process?: https://user5280.pros.is/39e8ck Revolut drops out of Singapore digibank race over high capital requirement: https://user5280.pros.is/3axup5 Singapore to issue digital bank licences: https://user5280.pros.is/387s4d