Singapore pushes digital banks in face of tightening security


“Regulatory tightening that’s happening in China will not have an impact on the digital banks here, ” Ravi Menon, managing director of the Monetary Authority of Singapore, said in an interview ahead of Singapore’s annual fintech festival that starts Dec 7.

SINGAPORE: Singapore’s financial regulator will stick with its plans to award digital banking licences by the end of the year, undeterred by tightening scrutiny in China and the United States that’s hitting major Chinese applicants.

“Regulatory tightening that’s happening in China will not have an impact on the digital banks here, ” Ravi Menon, managing director of the Monetary Authority of Singapore, said in an interview ahead of Singapore’s annual fintech festival that starts Dec 7.

“It’s not our job to try to guess what the geopolitical situation might be like, what actions might be taken by other countries with respect to some of these entities.”

The permits are much coveted by Chinese firms and others, given the city’s status as a regional financial hub and rapidly growing wealth management centre.

Billionaire Jack Ma’s (pic below) Ant Group Co, among high-profile candidates vying for the permits, shelved its initial public offering after a clampdown and higher capital requirements imposed by Chinese regulators.

As many as five licences will be awarded from a list of 14 eligible candidates.

Bytedance Ltd, whose joint venture is another contender, has been hit by the US government’s order to sell its TikTok video app.

Singapore has its own requirements for digital bank licences that include the ability to provide good services with appropriate risk management, as well as a smooth exit strategy, Menon said, without confirming the identities of any applicants.

The MAS is taking a progressive approach in regulating such firms, such as by restricting their ability to take deposits initially, before giving them permission to operate more freely once they prove profitability over time, Menon said.

“China started from a different place – initially it did not regulate many of these fintech entities to the full extent, ” he said. “And now the authorities are converging to the same position as most of the rest of the world. I think that’s the right thing to do, and it creates a level playing field.”

Asked whether government relationships would play a role in the regulator’s decision making on digital-bank licences, Menon ruled out any favouritism and said it is “strictly merit-based.”

“We will not penalise banks from any country because of sanctions it might be under. We also don’t give favourable treatment to banks from any country on account of good relations, ” he said.

TikTok, one of the world’s most popular apps, got a two-week extension on a Nov 12 deadline to sell its American business as the United States gauges whether it poses a threat to national security.

“MAS would need to balance these considerations against the implications of the shifting China-US relations and recent regulatory developments in China, ” said Wong Nai Seng, a partner at Deloitte in Singapore, who worked at MAS for more than 17 years.

“Ant Financial and ByteDance are major technology companies with strong track records in technical capabilities and innovation.” They’ve made “significant investments” in Singapore, he said.

Other Chinese firms vying for the licences include a consortium led by Zall Smart Commerce Group, and a bid involving mobile phone maker Xiaomi Corp and Hong Kong financial firm AMTD Group Co.

Earlier this year, the MAS postponed its plan to award digital-banking permits to non-banks from June due to the global Covid-19 outbreak. — Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

   

Did you find this article insightful?

Yes
No

Next In Business News

AirAsia proposes RM454mil private placement
Bintai Kinden plans fresh private placement to fund property venture
SC expands grant scheme to promote sustainable devt fund raising
Lower demand for oil pipes and valves hurts Pantech 3Q earnings�
Semicon, glove stocks losing their grip
Sources: Ant’s Malaysian e-wallet venture with CIMB in talks to raise US$150mil
Tenaga: 10,768 commercial customers to benefit from 10% Permai discount
RAM expects corporate bonds issuance of up to RM110b
Celcom introduces Celcom Cloud Suite to accelerate digital adoption
CIMB Thai FY20 net profit dips on higher provisions

Stories You'll Enjoy