July 11, 2019
In 2019, there’s no real need to explain the idea of a ‘virtual bank’ – put simply, it’s defined as a bank which delivers financial services primarily through the internet or other digital channels instead of physical branches. While its easier to understand the consumer side of it, but why do we need virtual or digital-only banks? What under-served or unserved customer segments or use cases are we targeting? Is there a solid business proposition here to set up such a bank or just sizzle? To know the answers to these questions, listen to an interesting chat that we are bringing to you as a part of this article, in the SoundCloud link below, after a few paras.
Why are we focusing on Singapore in this article? On June 28, 2019, as many of you might already know, the Monetary Authority of Singapore (MAS) announced that it will issue up to five new digital-only bank licenses. The move extends the eligibility for digital bank licenses to non-bank players as well. The five new licenses will comprise:
(a) up to two digital full bank licenses: allowing the provision of a range of financial services and deposits to be taken from retail customers by licensees, and
(b) up to three digital wholesale bank licenses: allowing services to be provided to SMEs and other non-retail segments by licensees.
This move is a step towards establishing standalone digital banks giving an opportunity to non-banks and tech players. In 2000, MAS had allowed the establishment of existing banks to have digital subsidiaries called