Banking on Digital: What’s Powering Digital Banks in Singapore?

  • Post category:Singapore

In the financial sector, digital banking has emerged as a disruptive force that is revolutionizing how people and organizations handle their finances. Singapore digital banks often have no branch network and conduct most of their business online and through applications. Given that some of the more recent competitors are still in the product-development stage, the services offered by digital banks might vary significantly.

Banking on Digital What’s Powering Digital Banks in Singapore

Being a digital native is a great quality of Singapore’s new digital banks. That indicates that they aren’t just brick and mortar banks that have added digital services; rather, they were designed to provide services both online and within apps. This ensures that the applicant will receive the most recent in online security and can result in a more intuitive customer experience when using their apps.

MAS DIGITAL BANKING LICENSE

The Monetary Authority of Singapore (MAS) granted licenses to four successful applicants for digital banks on December 20, 2020, who began operations in 2022. The MAS’s technological risk management rules, some of the most thorough and severe in the world, were among the prudential regulations and license requirements that digital banks had to satisfy before they could begin operations.

More service providers, including non-bank entities, now have the chance to offer banking services in Singapore. Retail consumers can be served by DFB license holders, while business banking and other non-retail customer categories are covered by the DWB license. The distinctions between the two are listed below:

DIGITAL FULL BANK LICENSE VS DIGITAL WHOLESALE BANK IN SINGAPORE

Digital Full Bank (DFB) License

Singapore’s Digital Full Banks, which offer a variety of financial goods and services, have a license to serve retail customers. These financial institutions provide personalized service to each of their clients, providing them with convenient and online banking options. DFBs aim to offer inclusive banking services and draw a diverse customer base by not requiring a minimum deposit.

Digital Full Banks have the freedom to provide a range of investment and credit products. Some of these include fundamental savings accounts, current accounts, debit and credit cards, loans, mortgages, insurance products, and investment opportunities.

DFBs empower users to conduct transactions, manage their accounts, and get financial advice effortlessly from their mobile devices or PCs by utilizing cutting-edge technology to create seamless digital experiences.

Digital Wholesale Bank (DWB) License

On the other hand, Digital Wholesale Banks prioritize serving Small and Medium Enterprises (SMEs) and other non-retail clients. They attempt to satisfy the financial requirements of enterprises rather than single consumers. DWBs provide specialized banking products designed to meet the needs of SMEs, including corporate lending, trade financing, cash management services, and access to working capital.

Although DWBs don’t have a minimum deposit requirement for businesses, they do for individual consumers, who must deposit at least S$250,000. As a result, DWBs are guaranteed to serve non-retail clients primarily, keeping their focus on servicing the financial needs of businesses rather than focusing on serving individual consumers.

Those who wish to open a Digital Wholesale Bank must describe their intended companies in their application. While the initial product offerings of DWBs are restricted to the listed enterprises, they do have the opportunity to later request regulatory authority clearance to broaden the scope of their commercial operations. This adaptability enables Digital Wholesale Banks to expand their offerings in response to changing market conditions and client demands.

WHAT ARE THE MOTIVATING FACTORS FOR SINGAPORE’S DIGITAL BANKS?

  • An increase in the demand for mobile and digital banking alternatives

Consumer patterns are changing, and digital banks may capitalize on them by using these trends. As more individuals go online, one trend is the rising desire for mobile and digital banking alternatives, as well as the creative and useful solutions they provide.

Digital banks are better positioned to develop quicker and better digital banking services to satisfy unfulfilled client needs because of their lean business structures.

  • Technology 

It comes as no surprise that technology has made digital banking possible. These banks have grown as a result of machine learning, artificial intelligence, big data, automation, and other factors.

Digital banks can gather and process data on consumer preferences and behaviors more quickly than traditional banks thanks to these technologies. It enables them to provide their consumers with more specialized services and goods.

In order to increase customer targeting and deliver services to precise customer categories, digital banks also make use of the most recent technologies. Digital banks will eventually have deeper insights into client needs due to smart technology and data, enabling them to develop solutions to fulfill those needs.

  • A Digitally Advanced Country

Singapore is ranked fourth globally in the World Digital Competitiveness Ranking 2022, behind other countries with advanced digital infrastructure like Sweden and Switzerland.

According to Singapore’s rating, it is ready to transition to new technologies like digital banking.

LIST OF DIGITAL BANKS IN SINGAPORE

  • GXS bank by Grabpay and Singtel – GXS3 was launched by Grab, the top app in Southeast Asia, and Singtel, Asia’s top provider of communications technology. It is well-known for its ride-hailing, food delivery, and other services. 

At the time of writing, GXS offers a variety of goods and services, including savings accounts that offer daily interest, simple ways to transmit payments and spend money, and straightforward ways to accumulate more rewards as the applicant proceeds.

  • Sea digital bank – The internet company Sea Limited is the one that runs Shopee and Garena as well as Sea Money, which has been providing financial services since 2014. One may already be familiar with Sea Money from their Shopee Pay and SPayLater services, but they can now use their digital banking services as well.
  • Trust bank With savings accounts, credit cards, and insurance products, Trust has solutions for saving and spending that are supported by Standard Chartered and FairPrice. One can also enjoy big savings on their purchases when they use their services because Trust started in part through FairPrice. In fact, using a Trust credit card at FairPrice could result in savings of up to 21%. there are simple methods to increase the benefits and receive referral bonuses.
  • ANEXT bank by Ant Group – Business banking services are provided by ANEXT, which is owned entirely by Ant Group, a subsidiary of Alibaba. You can open a business bank account for free in SGD or USD with no required minimum balance. Sending and receiving payments in 9 major trading currencies, including SGD, USD, GBP, and EUR, are choices for both domestic and international transactions.
  • Green Link Digital Bank Green Link Digital Bank, often known as GLDB, provides commercial services such as trading tools, overdraft protection, loans, and bank accounts. The services provided by GLDB, such as current accounts and savings products, are offered in both SGD and USD.

Investors supporting GLDB include the Linklogis consortium and Greenland Group. The Greenland Group engages in international real estate and infrastructure development, while Linklogis offers supply chain finance technology solutions.


BENEFITS OF SINGAPORE DIGITAL BANKS

  • Convenience – Singapore’s digital banks enable consumers to manage their accounts whenever and wherever they like by providing 24/7 access to banking services via mobile apps and online platforms.
  • Lower Fees – As a result of reduced administrative costs, Singaporean digital banks frequently charge lower fees than local traditional banks, which makes them an appealing choice for customers who want to save money.
  • Innovative Features – Singapore’s digital banks provide consumers with advanced functions like spending monitors, budgeting tools, and other financial management tools that can help them manage their money more effectively.
  • Fast Account Opening – Singapore’s digital banks provide quick and simple account opening procedures that can be completed entirely online without the need to visit a branch.
  • Financial  Inclusiveness – Digital banks in Singapore are encouraging financial inclusion by providing banking services to underserved population segments, such as those without a credit history or people living in rural areas.

Refer to the Singapore company formation page and Singapore corporate bank account opening for more information.


CHALLENGES OF SINGAPORE DIGITAL BANKS

  • Trust and Credibility – Establishing confidence and credibility can be difficult for Singaporean customers who are used to traditional banking procedures and may be hesitant to entrust their money to a brand-new, online-only company.
  • Regulatory Compliance – Given the industry’s quick rate of innovation and technology improvements, Singapore’s digital banks face the issue of adhering to the same regulatory standards as traditional banks.
  • Customer Support – Singapore’s digital banks provide few options for customer care, making it challenging for customers who prefer direct communication with a human person over chatbots or automated systems.

Reach out to us at Relin Consultants for further assistance.

FAQs

What is a digital bank?

A financial organization known as a “digital bank” offers banking services only online and through mobile platforms. Digital banks do not need physical branches.

How do Singapore’s digital banks vary from the traditional banks?

Digital banks in Singapore, in contrast to traditional banks, are entirely online-only institutions without any branches. Furthermore, they frequently experience fewer administrative expenses, which enables them to provide lower fees and better interest rates on deposits.

What services are provided by digital banks in Singapore?

Deposits, loans, and credit cards are just a few of the banking services that digital banks in Singapore provide. Even modern amenities like spending monitors, budgeting tools, and other money management tools are available from some digital banks.

Are digital banks in Singapore safe?

Digital banks are subject to the same rules and regulations as regular banks in Singapore and are governed by the MAS. They also employ advanced security methods to safeguard client data and stop fraud.

How do users access Singapore’s digital banks to get banking services?

Through mobile apps and internet platforms offered by digital banks in Singapore, customers can easily access banking services. Users are able to carry out a number of operations using these digital channels, including checking account balances, moving money, and paying bills.