China’s Ant Financial joins Razer, Grab in contest for Singapore digital banking licence

Jane Zhang

China’s fintech giant Ant Financial has applied for a digital wholesale banking licence in Singapore, joining the city state’s digital banking race to create virtual lenders after gaming start-up Razer and ride-hailing company Grab applied for full banking licences in the same week.

“In line with our commitment to promoting financial inclusion globally, we have submitted an application to the Monetary Authority of Singapore (MAS) for a digital wholesale banking licence,” an Ant Financial spokesperson told the South China Morning Post on Thursday. “We look forward to contributing to the development of the digital banking landscape in Singapore.”

Last June the MAS unveiled plans to grant as many as five virtual bank licences to boost competition and innovation. Requiring capital of S$1.5 billion (US$1.1 billion), two will be full bank licences that will allow the applicant to provide a range of banking services to retail and non-retail customers. The other three will be wholesale licences, requiring capital of S$100 million, allowing applicants to provide services to small and medium enterprises as well as other non-retail customer segments.

“Singapore is already a well-served market – although there is still scope for technology-led innovators to compete, especially in servicing SMEs,” said James Lloyd, Asia-Pacific financial-technology lead for consulting firm EY. “A key question is how much technology can serve as a true differentiator in a relatively small market like Singapore – both in terms of reducing overheads and improving customer experience.”

Singapore’s move to open up its banking industry to technology companies comes after Hong Kong granted similar licences to companies including Ant Financial and Tencent Holdings earlier last year.

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Southeast Asia’s digital lending market is expected to grow from US$23 billion in 2019 to US$110 billion by 2025, representing a 29 per cent compound annual growth rate, according to a report by Bain & Co, Google and Temasek Holdings.

Razer teamed up with Sheng Shiong, the private unit of supermarket chain owners the Lim brothers, and FWD, the insurance business of Pacific Century Group, to apply for a full digital banking licence on Thursday. The consortium is the second group to submit a licence application, after Grab Holdings and Singapore Telecommunications announced their joint bid on Monday, in which Grab holds 60 per cent equity.

If its application is approved, Razer Fintech, the company’s financial technology unit, plans to build the world’s first global youth bank, Razer Youth Bank, to focus on serving youth and millennials. The company said in a statement that it will own a 60 per cent majority stake while its strategic partners will take up the remaining equity interest.

“Addressing the unmet financial needs of the large, yet underserved, segment of the population through an innovative digital-first banking platform is a natural extension of our payments business,” Lee Li Meng, chief strategy officer of Razer and chief executive of Razer Fintech, said in a statement.

Bids for the virtual licences were due by the end of 2019 and the MAS is set to announce the successful applicants by mid-2020.

Ant Financial is an affiliate of Alibaba Group Holding, which owns the Post.

Additional reporting by Tracy Qu

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