This is why Singapore may soon welcome its first digital banks

Before long, Singapore may see its first five digital banks open in the country. And it could be the biggest shake-up of the country’s banking sector in decades. 

The nation has announced an application process for up to five new digital bank licences. The application process will run until December 31. People interested in opening their own digital bank must submit a feasible exit plan and have a proven track record in the technology or e-commerce sector, among other things.

And there may be plenty of non-banking entities ready to disrupt the country’s banking sector as several companies have expressed interest in leveraging their technology to offer banking services, according to a Reuters report. That would include the Asian Uber-rival Grab and Singapore Telecommunications (STEL.SI).

“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 on Thursday.

With the country having been dominated by local banks for a long time, Reuters speculated that this could lead to the biggest shake-up of the sector in two decades.

It is not the only country that has recently opened up its banking sector to challenger banks. For instance, Australia has seen a spike in challenger banks over the past two years.

As FinTech Global has previously reported, part of the reason is the introduction of restricted authorised deposit-taking institutions licences, which gives new organizations, like neobanks, the chance to enter the market and conduct a limited range of activities.

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