The digital full-bank licence will allow licensees to provide a wide range of financial services and take deposits from retail customers. A digital wholesale bank licence will allow licensees to serve SMEs and other non-retail segments.
Any competition deemed to be"value-destructive" will not qualify. MAS will look at the financial projections from the applicants such as cost-to-income ratio, and projected net interest margin. Once MAS deems that the restricted digital full bank performs to show, among other things, good quality of loans, and a well-managed business, the restricted digital full bank will be graduated to a full functioning digital bank by the regulator. No timeline has been set by MAS on this.
Singapore - a heavily banked country - has already seen several of the traditional banks here investing heavily in digital capabilities in recent times. The local banks are also fairly well-entrenched, with Singapore's top three banks estimated to hold a combined market share of just over 50 per cent. The market will watch if digital banks - with their nimbleness but a much smaller asset base - will be able to wrest market share from the big guns here.
"The experience of the global financial crisis and its aftermath vindicated our view," adding that the dual objectives of permitting greater competition spurring greater innovation in finance, together with retaining strong local anchors and trust in the banking system, have guided Singapore's past liberalisation initiatives, and motivated the country's next moves.
Source: News Formal (newsformal.com)
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