What Does The Future Of Digital Banking In Singapore Look Like?

Singapore’s first digital banks are set to launch this year. What can consumers expect and how will this change the digital banking landscape in Singapore?

In December 2020, the Monetary Authority of Singapore (MAS) awarded digital bank licenses to four contenders: a digital full bank (DFB) license each to a Grab-Singtel consortium and tech giant Sea, and digital wholesale bank (DWB) licenses to Ant Group and a consortium led by real estate developer Greenland Financial Holdings.

Fast forward two years later, and the four digital banks are set to launch. What does this bode for the future of digital banking in Singapore? Find out as we share more on Singapore’s four digital banks and what to expect.

What can Singapore’s four digital banks offer?

Digital banks offer the same banking services as their traditional counterparts, with the main difference being that these services are provided online rather than at a physical branch. Digital banks in Singapore also seek to deliver innovative and personalised financial services, made possible with the use of technology and data.

Imagine opening an account, investing or applying and getting your loan approved on your smartphone, all in a matter of minutes. Bonus: you don’t even have to leave your bed. And that’s just the tip of the iceberg. With lower overheads, digital banks can afford to push out financial products with attractive rates.

Here’s a closer look at the four digital banks in Singapore and what they might bring to the table.

1. Grab and Singtel (DFB)

Grab and Singtel are well-known names among Singaporean households. Widely viewed as leaders of their own industries, both have also ventured into financial services with the likes of mobile wallets GrabPay and Singtel Dash, insurance savings plan Dash EasyEarn, and GrabInvest.

What comes next? Look out for Grab and Singtel’s joint venture, GXS Bank. With their huge existing customer bases and established network of partnerships, you can expect this digital bank to come up with new financial solutions that leverage on its existing ecosystem. For a start, GXS Bank seeks to target underserved segments that include gig economy workers and micro businesses.

2. Sea Group (DFB)

The parent company of e-commerce platform Shopee, Sea also owns game developer Garena and SeaMoney, its fintech arm. Through SeaMoney, it has launched several payment solutions that include AirPay, ShopeePay, and the recently launched Buy Now Pay Later (BNPL) service SPayLater.

Like Grab and Singtel, it’s likely to leverage on its existing customer base by introducing  financial services targeted at buyers and sellers on the Shopee platform.

3. Ant Group (DWB)

Arguably one of the largest fintech firms globally, Ant Group is best known for payment solution Alipay. Unlike digital banks with DFB licences, Ant Group will be looking to serve Micro, Small & Medium Enterprises (MSME) in Singapore, most likely starting with those who are already using Alipay or have business dealings with China.

4. Greenland consortium (DWB)

Led by Greenland Financial Holdings, a subsidiary of Chinese real estate developer Greenland Group, the consortium also includes blockchain-based supply chain financing platform Linklogis Hong Kong & Beijing Co-operative Equity Investment Fund Management.

While not much has been shed on the consortium’s plans, MSMEs in Singapore can expect the digital banks with DWB licences to offer greater flexibility when it comes to funding and credit lines.

COVID-19’s impact on digital banking in Singapore

In the past two years, the financial services sector – and digital banking in particular – has seen great leaps as the COVID-19 pandemic and lockdowns that came with it forced incumbent banks to transform and fast track their digitisation plans for the next few years into months.

This led to accelerations in the spheres of digital payments, virtual banking and BNPL services such as PayLater by Grab as consumers search for ways to stretch their dollars while getting rewarded. Consumers are also adopting digital tools and banking services at unprecedented levels, which resulted in cashless payments like PayNow transactions doubling in 2020.

According to the e-Conomy SEA 2021 report by Google, Temasek, and Bain & Company, digital consumption is now a way of life for Southeast Asians and digital financial services are critical enablers. This is set to grow even more as a whopping 61% of those surveyed foresee increasing their usage of digital payments in the next two years.

With the adoption of digital banking services reaching critical mass, speed, convenience and security has become the norm. To attract consumers, digital banks in Singapore have to find new ways of creating value.

What to expect in the future of digital banking

With their reliance on technology and data, digital banks have the propensity to introduce financial solutions that are markedly different from what incumbent banks are used to offering. Financial inclusion, shared ecosystems, and greater personalisation are but some of the things Singaporeans can look forward to.

Greater financial inclusion 

With the help of technology and AI, digital banks can introduce new methods of credit scoring. This helps underbanked segments like freelancers or small business owners gain greater access to funds and credit.  

Rise of the ecosystem 

According to this digital banking customer survey by PwC, 66% of Singapore consumers want digital banks to offer more than just financial services. Think super-apps that combine financial offerings together with non-financial services such as e-commerce or health, wellness and travel on a singular platform.

Personalised and differentiated experience

By leveraging huge amounts of customer data across the ecosystem, digital banks are better positioned to offer customers personalised solutions based on their history. Newer efficient systems also make for a better user experience characterised by simple sign-ups, faster turnarounds, and excellent service.

We may not have an exact idea of what’s in store until the digital banks launch sometime later this year, but one thing is for sure – consumers can expect more choices and anticipate new ways of doing things.

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