All banking services will be done online, with digital banks not having a physical branch or ATMs.

Singapore will have four digital banks, with digital full bank licences going to the Grab-Singtel consortium and tech giant Sea.

The Monetary Authority of Singapore also granted digital wholesale bank licences to Mr Jack Ma’s Ant Group as well as a consortium comprising Greenland Financial Holdings, Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management.

This means that for the first time here, non-banks will be allowed to provide banking services.

The eagerly awaited announcement, expected in June, was delayed after the assessment period for the award was extended due to Covid-19 pandemic.

Q What is a digital full bank?

A A digital full bank can serve both retail and corporate customers.

Like any traditional bank, it can provide ordinary Singaporeans with banking services such as the opening of accounts, giving loans, issuing debit and credit cards and offering investment products.

But all banking services will be carried out online, with the digital bank not having a physical branch or ATMs. This is different from traditional banks putting some banking services online via the Internet or mobile apps.

Q What is a digital wholesale bank?

A Such a bank will serve non-retail customers only, such as small and medium-sized enterprises.

Q How were the winners chosen?

A A total of 21 applications were submitted for the licences, and 14 were shortlisted.

The bidders included e-commerce companies, technology and telco firms, and fintechs such as crowdfunding platforms and payment services providers.

The winners were judged on the following criteria:

 • their value proposition and business model

 • the sustainability of their digital banking business

 • their innovative use of technology

 • growth prospects and other contributions to Singapore’s financial centre

Q How will Singaporeans benefit from digital banks?

A With less overheads, branchless digital banks may offer higher interest rates on deposits. Lower fees for financial products are likely as there will be no middleman used.

The lower costs of digital banks may enable them to better reach underserved groups in Singapore such as entrepreneurs and micro enterprises. These banks may offer to open deposit accounts with no minimum amount, for example, or adopt a different credit risk assessment approach.

There will be more convenience for customers, with all banking services at their fingertips 24/7.

There will be more personalised services – for example, with product recommendations – with the use of technology to gather and mine data.

There will also be more innovative services due to more competition, with banking opened up to non-bank players.

Q Any downsides?

A Possible drawbacks include:

 • technology and service interruptions

 • security and identity theft concerns

 • lack of a personal banker relationship

Q Do other economies have digital banks?

A They are not new. Here are some examples around the world:

 • Alibaba’s MYbank and Tencent’s WeBank in China

 • SBI Sumishin Net Bank in Japan

 • Kakao Bank in South Korea

 • Neat in Hong Kong

 • Timo in Vietnam

 • Up Bank in Australia

 • Starling Bank in the United Kingdom

 • Chime in the United States

 • Doconomy in Sweden