Will customer-centric banking define 2020?
The Monetary Authority of Singapore (MAS) has received 21 applications for digital bank licenses.
Tarini Ponniah, Chief Compliance Officer for Bruc Bond Singapore, says that she’s glad to see the city-state join the likes of the United Kingdom in embracing customer-centric digital banking. Coordination and cooperation between the MAS and regulators in other fintech- and digital banking-focused jurisdictions, like Poland, Lithuania, Japan and Australia, would hasten the widespread adoption of digital banking worldwide, she adds.
"With these digital bank licenses customer-centric banking is finally going to be a reality,” says Tarini Ponniah. “Singapore is yet again proving to be a front-runner in powering growth in the region by focusing on the demands of the un- and under-banked segments.”
Digital Banking in Singapore
The MAS is widely regarded as a nimble and forward-thinking regulator. This is why it came as no surprise that the MAS was quickly moving ahead with plans to issue licenses to digital banks. The applications quickly came pouring in, with the MAS announcing that it has received 21 applications for digital bank licenses at the close of the application period on 31 December 2019. Of these, seven applications were submitted for the digital full bank (DFB) licenses and 14 applications for the digital wholesale bank (DWB) licenses.
Submissions came from a diverse group of applications, including technology and telecommunications companies, e-commerce purveyors, a host of fintechs and from traditional financial institutions. A majority of the applications came from ad hoc consortiums created to leverage the respective strengths of individual players.
Some of the more interesting and well-known applications include a joint venture by Grab, a ride-sharing company in Singapore, and Singtel, one of the country’s foremost telecommunications giants; China’s Ant Financial; Singapore’s power grid operator SP Group; crowdfunding platform Funding Societies; Chinese electronic giant Xiaomi’s financial arm; and gaming company Razer.
The MAS intends to announce the successful applications in June 2020, who are slated to commence operations by mid-2021.
The MAS is intending to issue two types of licenses, one for digital full banks (DFB) and the other for digital wholesale banks (DWB). DFB’s are intended to serve retail customers, and to protect consumer interests the MAS is requiring licensees to meet stringent regulatory requirements, including meeting minimum paid-up capital of S$1.5bn. DFB’s must be based in Singapore and be controlled by Singaporeans.
Digital wholesale banks, by contrast, are intended to serve the B2B market. Their customers will be limited to small and medium-sized enterprises (SMEs) and other non-retail customers. Hence, their requirements for licensees are somewhat less exacting, with licensees needing only S$100m in capital. DWB’s can be majority-owned by non-Singaporeans.
One of the central requirements by the MAS is that applicants must “show a "clear value proposition" to meet under-served needs using technology,” the Straits Times reports.
The European Example: Britain, Poland and Lithuania
Like the MAS, European regulators are keen on adoption of innovative, customer-centric solutions. In recent years, Lithuania has become a key locale for Europe’s expanding network of non-bank financial institutions (NBFI), which has significantly raised the country’s standing in global financial markets. Neighbouring Poland has taken a different route, encouraging its highly-developed banking sector to adopt digital solutions to consumer needs. It is for this reason that a recent Deloitte study found Poland to be a leader in digital banking. “We can say that Poland is a digital leader, but Polish banks are varied in this regard,” commented Deloitte’s Daniel Majewski.
Leading the digital banking pack in Europe is the United Kingdom. The UK has now become a competitive hotbed for digital banks, with several eyeing penetrating markets very far from home. Their success has been nothing if not extraordinary, with so-called challenger banks now amassing millions of customers in Europe and worldwide, and expecting to treble their customer bases in 2020.
Tarini Ponniah says she hopes to see that kind of success replicated in Singapore, at least to begin with. Long term she would like to see much more cooperation between regulators to accelerate digital banking adoption in their respective jurisdictions. She hopes British and Singaporean regulators will be able to share from their experience to the benefit of customers worldwide.
For more information about Bruc Bond please visit www.brucbond.com
By Tarini Pooniah, COO, Bruc Bond Singapore
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.