SINGAPORE: Fintech Jack Ma, Ant Group Co., a venture led by Grab Holdings Ltd, and online games company Sea Ltd, which also owns Shopee, have won licenses to run digital banks in Singapore.
A consortium including China Green Financial Group Financial Group Co. was among the four winners announced by the Monetary Authority of Singapore (MAS) today after nearly a year of negotiation.
Singapore joins the UK and Hong Kong to open up its banking system to digital entrants, as it seeks to inject innovation and competition into a market dominated by traditional lenders.
The licenses are craving given the city’s status as a fast-growing wealth management center and gateway to Southeast Asia, where the digital lending market is expected to grow fourfold in five years.
Fully digital banks are allowed to take deposits and provide banking services to retail and corporate customers. Digital wholesale banks can only target SMEs and other non-consumer segments. They are expected to start operating from early 2022, MAS said.
MAS said it had decided to award licenses to two wholesale applicants who met its expectations and who were clearly stronger across the criteria. MAS had previously said it would issue as many as three wholesale licenses.
As the digital wholesale banks “are introduced as a pilot, MAS will review whether more such licenses should be issued in the future,” he said. The authority also said it had considered the impact of Covid-19 on applicants’ business plans and projections.
The applicants will provide new competition for lenders such as DBS Group Holdings Ltd.
Although more than 90% of Singapore’s adult population has bank accounts, the new entrants are likely to target segments including unsecured personal loans, as well as small and medium-sized companies that may not have good access to finance.
For Ant, the successful bid can lessen the pain she is experiencing in her home market in China after a series of regulatory landings eliminated her long-awaited initial share sale. The company co-founded by billionaire Jack Ma faces a slim chance of reviving its initial public offering in 2021 as China overhauls rules governing the fintech industry, according to regulatory officials familiar with the matter.
Grab joins Singapore Telecommunications Ltd on its digital bank, through a majority-owned enterprise. Founded in 2012 by Anthony Tan and Tan Hooi Ling as a taxi sourcing service, Grab has been providing some financial services to consumers and traders for more than a year. It has expanded its offerings with products including fixed income funds from Fullerton Fund Management and UOB Asset Management.
Sea, worth about US $ 90 billion, is the most valuable company in Southeast Asia. Singapore-born Chinese entrepreneur Forrest Li founded the city-state online gaming company in 2009 before taking it public in New York in 2017, by which time he had added an e-commerce platform, Shopee .
Greenland Financial is the investment arm of Chinese real estate developer Greenland. Its consortium includes Linklogis Hong Kong Ltd and Beijing Co-operative Equity Investment Fund Management Co.