Ant Group Co. and a venture led by Grab Holdings Inc. won licenses to run digital banks in Singapore, paving the way for the technology giants to expand their financial services in the Southeast Asian hub.
Sea Ltd. is also among the four winners announced Friday by the Monetary Authority of Singapore after almost a year of deliberation. A consortium involving China’s Greenland Financial Holdings Group Co. is the other successful candidate.
Shares of Singapore Telecommunications Ltd., which is partnering with Grab, jumped as much as 11% in Monday morning trading. Sea surged in New York on Friday.
Singapore joins the U.K. 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 center and a gateway to Southeast Asia, where the digital lending market is expected to quadruple in five years.
“Following a very competitive digital banking license process in Hong Kong recently, digital banks in Singapore will now be one of the first to capitalize on the booming Southeast Asia market,” said Mark Robinson, technology sector lead partner for Asia Pacific at Herbert Smith Freehills in Singapore. “Other countries in the region will follow suit, including Malaysia, as financial services continue on the path to further liberalization and greater digitization.”
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 applied a rigorous, merit-based process to select a strong slate of digital banks,” Managing Director Ravi Menon said in a statement. “We expect them to thrive alongside the incumbent banks and raise the industry’s bar in delivering quality financial services, particularly for currently underserved businesses and individuals.”
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.
MAS was unswayed by Ant’s woes in its home market of China after a series of regulatory clampdowns derailed its much anticipated initial share sale.
“What happened in China didn’t have much bearing on the decision we made on whom to give licenses,” MAS Chief FinTech Officer Sopnendu Mohanty said in a Bloomberg Television interview Monday. The authority is focused on Ant’s potential to serve small and medium-sized businesses through “a truly digital transformation,” he said.
In a statement, Ant touted its “substantial experience and proven success” working with partner financial firms to serve SMEs. “We look forward to building stronger and deeper collaborations with all participants in the financial services industry in Singapore,” it said.
Grab’s venture with Singtel plans to hire 200 people ahead of the debut, Charles Wong, who will lead the bank as chief executive officer, said Friday. The lender has recruited 10% to 15% of its planned workforce so far, he said.
Sea, worth about US$98 billion, is the most valuable company in Southeast Asia. Shares of the gaming and online shopping giant closed 8.3% higher in New York on Friday, their biggest gain in almost four months.
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.
Gaming company Razer Inc. tumbled as much as 12% in Hong Kong on Monday after missing out on a license. The firm said Friday that it will push ahead with a plan to roll out Razer Youth Bank, targeting millennials in countries such as Malaysia and the Philippines.