Singapore’s central bank kicked off the application process for up to five new digital bank licenses and issued detailed guidelines for potential contenders.
The entry of new players could lead to the biggest shake-up in two decades in a market dominated by local banks DBS Group Holdings Ltd, Oversea-Chinese Banking Corp and United Overseas Bank Ltd.
“The new digital bank licences, which will be extended to non-bank players, will ensure that Singapore’s banking sector continues to be resilient, competitive and vibrant,” the Monetary Authority of Singapore (MAS) said in a statement.
The MAS, which had flagged the liberalisation of the sector in June, said on Thursday that it would accept applications until the end of the year.
Asia’s non-banking firms have been keen to challenge traditional banks by leveraging their technology and user databases to offer banking services to retail customers and small businesses.
Hong Kong is the main financial centre rival, began issuing licences earlier this year.
The MAS plans to issue licences for up to two full and up to three digital wholesale banks.
“Digital full banks will be allowed to take deposits from and provide a wide range of financial services to retail and non-retail customer segments, while digital wholesale banks will be permitted to serve small and medium enterprises and other non-retail segments,” the MAS said.
The MAS expects to grant the licences in mid-2020 and digital banks are expected to start business within 12 months of receiving in-principle approvals from the central bank.