With about 3 months left to the announcement of the successful applicants of Singapore Digital Banking License, some are still unaware of what this topic is all about. So let’s take a look and let us walk you through to answer some of your questions.

Before We Begin, What Is a Digital Bank?

Although Digital Bank may sound like a perplexing new term, it is just a bank that provides similar type of banking services you would see in a traditional bank – offering deposits, loans, debit and credit cards. However, the difference is that it operates entirely online without a single physical presence, like a bank branch.

It is also worth noting that it is different from “Digital Banking”, a term which some traditional banks use to advertise their online banking services – those that you access via the Internet or on an application on your smartphones.

What is a Digital Bank License?

According to Monetary Authority of Singapore (MAS),

“The digital bank licences will allow entities, including non-bank players, to conduct digital banking businesses in Singapore. These new digital bank licences mark the new chapter in Singapore’s banking liberalisation journey, and ensure that Singapore’s banking sector continues to be resilient, competitive and vibrant.”

What does this mean? Well, a Digital Full Bank (DFB) license will allow the holder to take deposits from and provide banking services to retail and non-retail customer segments.

On the other hand, a Digital Wholesale Bank (DWB) license holder will be allowed to take deposits from and provide banking services to SMEs and other non-retail customer segments.

MAS is issuing up to 5 digital banking licences – up to 2 full bank licences, and up to 3 for wholesale banking. MAS is expected to announce the successful applicants by mid-2020.

What Do You Need to be get a Digital Bank License in Singapore?

The utmost importance is that the applicants will have to demonstrate their commitment to building a sustainable Digital Bank business, while making a significant contributions to Singapore’ financial hub. In addition to that, MAS will evaluate all eligible applications based on their innovative use of technology to cater to the customer needs.

Digital Full Bank (DFB) Digital Wholesale Bank (DWB) Minimum Paid-up Capital Requirement SGD 1.5 billion SGD 100 million Shareholding Conditions The business must be based in Singapore and controlled by Singaporeans The business can be majority-owned by foreign entities, but must be based in Singapore.

Furthermore, all Digital Bank contenders in Singapore must demonstrate a path towards profitability, and submit a 5-year financial projection of the proposed Digital Bank. They should also indicate when the proposed Digital Bank is expected to break even, regardless if they can achieve that in the first 5 years.

In addition to that, at least 1 entity in the consortium must hold 20% stake, and that entity must have a minimum of 3 years proven record in operating an existing technology or e-commerce business.