Singapore - Financial Fitness and Digital Banking in the Times of COVID-19

Updated On : September 2020

Singapore has announced plans to issue up to five digital bank licenses as part of efforts to add market diversity and boost the banking system in the country, as it looks to become a digital economy. The move also is part of a market liberalization journey spanning two decades and an extension of an existing internet banking framework that has allowed local banks to establish digital bank subsidiaries.

Ever since the Monetary Authority of Singapore (MAS) announced the issuance of two digital full bank (DFB) licenses and three digital wholesale bank (DWB) licenses, a wide line-up of tech startups have started preparing to grab the first opportunity of riding the new technological wave.

The idea behind this move is to help these banks reach a wider segment of customers at lower costs, which most of the banks are focused on doing these days. The digital bank licenses will mark a new chapter in Singapore's banking liberalization journey and ensure that Singapore's banking sector continues to be resilient, competitive and vibrant.

According to the Monetary Authority of Singapore (MAS), non-bank organizations would be able to apply for a license and offer digital banking services. In this latest move, MAS said it would issue up to two digital full bank licenses, allowing licensees to offer financial services and take deposits from retails customers, and up to three digital wholesale bank licenses, which would enable licensees to serve small and midsize businesses (SMBs) and other non-retail segments.

Singaporeans will be able to benefit a more efficient banking system at the convenience of their fingertip. On top of that, digital banks can take a step further with more personalization when it comes to product recommendations from all the data they have gathered. Having recognized that digital banks have less overhead to upkeep, the cost of maintaining bank branches and ATMs can translate into higher interest rates for customers.

Digital banks, also called challenger banks, give customer a way to control their money, by allowing customer to bank entirely from their smartphone. With a digital bank, sign up to an account in minutes, get card relatively quickly (and also get a virtual card), benefit from convenient features such as low foreign currency spending and smart security controls and more

Relying heavily on big data, analytics and artificial intelligence (AI) to improve the customer experience, digital banking also automates every step of the bank's front-end and back-end processes – and everything in-between.

Creating an account with a digital bank is a paperless process, and with fewer operational costs, digital banks can price their services and products more competitively than their brick-and-mortar counterparts.

Digital banks' smaller branch footprints – MAS' regulations for digital banks allow for only one physical branch – also means minimum staff will be required, freeing up employees' time for higher-value tasks. Relationship managers will potentially spend less time collecting customers details and more time giving advice.

Today's customers are trailblazers and are adopting these recent technologies which has changed the way they interact with their banks. With Digital Banking services, you can make banking simple, convenient and available wherever your customers are.

FinCraft^TM Digital Banking Suite help financial institutions provide compelling digital banking experiences, and is designed to Attract, Engage and Extend Customer Relationships. Nelito provides you Omni-Channel digital banking suite which consists of core banking, mobile banking, internet banking and doorstep banking solutions. This enables you to drive innovation and growth, provide seamless customer experience and achieve operational excellence.

With digitalization set to change the traditional banking business model, there are plenty of positives for banks and other financial institutions that are ready to embrace it in Singapore and across ASEAN.