Two months after announcing plans to issue digital banking licences, the Monetary Authority of Singapore (MAS) is set to accept the first applications.
Applications can be sent in before December 31 and at least one of the parties must be able to show a track record of three or more years in operating a technology or e-commerce project according to the MAS criteria.
The regulator is also looking for “innovative use of technology to serve customer needs and reach underserved sections of the Singapore market”.
Other criteria that will be considered in the applications include the ability to manage a “prudent and sustainable” digital banking business, said the MAS.
No more than five licences will be awarded this year – two for full digital banks and three for wholesale digital banks.
The chosen banks will be subject to the same rules as existing banks as regards areas such as technology risks, money laundering and terrorist financing, added the regulator.
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They should also expect tight restrictions for the first two years of operations including a cap on deposits of $36m and a requirement of paid up capital of $10m which will rise to $1bn within the first three years of operation.
The successful applications will be announced in 2020 and will be expected to open for business by mid-2021.
The digital banking plans have sparked talk of collaborations in Singapore’s banking sector between traditional lenders and non-bank newcomers. The likes of online taxi firm Grab, local telco Singtel and peer-to-peer lender Validus Capital have all reportedly expressed an interest in applying while Chinese bank OCBC has also explored the idea of taking a monitory stake in a digital bank venture.