Ant, Grab and Shopee’s owner win Singapore digital bank licences

 

Four digital banking licences were awarded by the Monetary Authority of Singapore today. (Reuters pic)

SINGAPORE: Jack Ma’s fintech Ant Group Co, a venture led by Grab Holdings Ltd, and online gaming company Sea Ltd, which also owns Shopee, have won licences to run digital banks in Singapore.

A consortium involving China’s Greenland Financial Holdings Group Co was among the four winners announced by the Monetary Authority of Singapore (MAS) today after almost a year of deliberation.

Singapore joins the UK and Hong Kong in opening up its banking system to purely digital entrants, as it seeks to inject innovation and competition into a market dominated by traditional lenders.

The permits are coveted given the city’s status as a rapidly growing wealth management centre and a gateway to Southeast Asia, where the digital lending market is expected to quadruple in five years.

Digital full banks will be allowed to take deposits and provide banking services to both retail and corporate customers. Digital wholesale banks can only target small- and medium-sized businesses and other non-consumer segments. They are expected to start operating from early 2022, MAS said.

MAS said it decided to award licences to two wholesale applicants which met its expectations and were demonstrably stronger across the criteria. MAS had previously said it would give as many as three wholesale licences.

As the digital wholesale banks “are introduced as a pilot, MAS will review whether to grant more of such licences in the future,” it said. The authority also said it had taken into consideration the impact of Covid-19 on the business plans and projections of applicants.

The entrants will provide fresh competition for lenders such as DBS Group Holdings Ltd.

While more than 90% of Singapore’s adult population have bank accounts, the newcomers are likely to target segments including unsecured personal loans, as well as small- and medium-sized firms that may not have good access to financing.

For Ant, the successful bid may lessen the pain it’s experiencing in its home market of China after a series of regulatory clampdowns derailed its much anticipated 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 is teaming up with Singapore Telecommunications Ltd on its digital bank, through a majority-owned venture. Founded in 2012 by Anthony Tan and Tan Hooi Ling as a taxi-hailing service, Grab has been providing certain financial services to consumers and merchants for more than a year. It’s broadened 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. China-born Singaporean entrepreneur Forrest Li founded the online gaming company in the city-state in 2009 before taking it public in New York in 2017, by which point it had added an e-commerce platform, Shopee.

Greenland Financial is the investment arm of Chinese state-owned real estate developer Greenland. Its consortium includes Linklogis Hong Kong Ltd and Beijing Co-operative Equity Investment Fund Management Co. - FMT