How does Singapore’s burgeoning digital banking scene stack up against Hong Kong and Britain?

The Lion City’s central bank is this year issuing five new digital banking licences, stirring up competition and increasing innovation in the sector

One expert says that since Hong Kong and Britain were earlier adopters of digital banking than the island nation, it could see what worked for them and adopt those strategies

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Digital banks offer banking services but operate entirely without bricks and mortar branches. Photo: EPA

Published: 2:30pm, 25 Jan 2020Updated: 2:40pm, 25 Jan 2020

The announcement that Singapore’s central bank would this year award up to five new digital banking licences to non-lenders has ushered in what analysts are calling a second wave of transformation for the city state’s banking space.

The first wave of changes rolled out over a five-year period starting in 1999, when new players jumped into an arena dominated by the likes of DBS Bank, Overseas-Chinese Banking Corporation (OCBC), and United Overseas Bank (UOB).

Analysts say the competition for this year’s licences is likely to see the entrance of non-conventional players such as fintech companies and Chinese technology giants into the sector, potentially stirring up competition and introducing new offerings for businesses and consumers alike.

“Rather than a wake-up call for the incumbents, these new digital banking licences could serve as a much-needed catalyst to help traditional financial firms become even more committed to their digital strategies,” said Divyesh Vithlani, who leads Accenture’s financial services in Asean.

He added that banks had invested heavily in making their operations more data driven in recent years.

This was in line with what the Monetary Authority of Singapore (MAS) said when announcing the guidelines of the keenly watched battle – that the move was to ensure the banking sector remained “resilient, competitive and vibrant”.

The central bank said it would be announcing the results in June, and digital banks would be expected to kick off business in mid-2021.

The new digital bank licences are ushering in what analysts are calling a second wave of transformation for Singapore’s banking space. Photo: AFP