Following Hong Kong, a virtual banking licence will also be issued in Singapore

Singapore is likely to follow Hong Kong in issuing virtual banking licences, according to Piyush Gupta, chief executive of DBS, the country’s largest commercial bank. The move will create another source of competition for Singapore’s existing Banks.

In response to a question from Singapore’s Business Times about whether Singapore would issue a virtual banking licence, a spokesman for the HKMA said the bureau had been assessing how digital banks of “non-bank” origin could provide value and how potential risks could be managed and controlled.



Guptabn recently spoke to Bloomberg TV. Asked if the Singapore authorities might issue similar permits like Hong Kong, he replied, “I see no reason not to do so.” But he played down the impact the move could have on existing banks in Singapore. Currently, these banks have to compete not only with international giants such as Citigroup Inc., but also with fintech startups.

Mr Gupta said that since existing banks had been upgrading their digital capabilities, no new players in virtual banks should be seen as a threat. “In my opinion, this is basically just a few more banking licences. “He added.




Virtual Banks typically have lower operating costs than traditional Banks that rely on physical branch networks. Last month, Gupta told DBS ‘annual shareholder meeting that a new digital bank could generate $100 in revenue at a cost of just over $30. DBS, by contrast, had a cost-to-revenue ratio of 44％ last year.

In the interview, Mr Gupta said he thought there was only one question about the issue of virtual banking licences in Singapore: whether the authorities would take more relaxed regulatory measures for virtual Banks, such as lowering capital requirements for them. “”The real challenge is whether regulators will create an unequal playing field, allowing new licensees to enter the banking business at the same time under different terms.” “He said. But he said most regulators “don’t seem inclined to” do so.

Singapore’s banking sector is now dominated by three local Banks — DBS, Ocbc and UOB — although foreign companies such as HSBC and citigroup also have branches in the country.