Ant Financial and Xiaomi among 21 applicants for Singapore digital bank licence


Ant Financial Services and a consortium that includes Hong Kong-listed smartphone maker Xiaomi are among those who have bid for digital bank licences in Singapore, intensifying a rivalry between Hong Kong and the city state to promote fintech-related financial services.

The Monetary Authority of Singapore (MAS) said on Tuesday that it had received 21 applications " seven for retail banks and 14 for wholesale banks.

The MAS will announce the winners in June, exactly a year after announcing its biggest banking liberalisation in decades. Singapore's central bank plans to issue up to five licences " two retail and three wholesale licences " with the banks expected to start operations in mid-2021.

The bids from Ant Financial and Xiaomi, which won virtual bank licences in Hong Kong last year, show their ambitions in expanding in the region. Ant Bank (Hong Kong) will start operating later this year.

Ant Financial has bid for a digital bank licence in Singapore. Photo: Bloomberg alt=Ant Financial has bid for a digital bank licence in Singapore. Photo: Bloomberg

The MAS' move comes after the Hong Kong Monetary Authority, the city's de facto central bank, issued eight virtual bank licences last year. This shows that the two cities are competing with each other to promote fintech by bringing in new players to inject new technology and business models in the banking sector.

While the HKMA has permitted the banks to join the ATM network, allowing customers to withdraw cash, the MAS says that digital bank customers will be barred from using ATMs, as it wants them to come up with other innovative banking methods.

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A spokesman for Hangzhou-based Ant Financial confirmed that the company was one of the digital bank applicants in Singapore. Ant Financial is an affiliate of Alibaba Group Holding, which owns the South China Morning Post.

"In line with our commitment to promoting financial inclusion globally, we have submitted an application to the Monetary Authority of Singapore for a digital wholesale banking licence. We look forward to contributing to the development of the digital banking landscape in Singapore," the Ant Financial spokesman said.

Xiaomi meanwhile has teamed up with Hong Kong-based financial company AMTD Group, energy firm SP Group and SME financing operator Funding Societies for a wholesale licence in Singapore, the consortium said in a statement on Tuesday without providing a shareholding breakdown. The statement added that AMTD is taking the lead.

"Our ultimate goal is to establish Singapore's most innovative platform bank through an ecosystem of strategic partners to cater for the entire spectrum of funding and business development needs of SMEs and entrepreneurs," said Calvin Choi, chairman and chief executive of AMTD Group.

Smartphone maker Xiaomi has bid for a online bank licence in Singapore as part of a consortium. Photo: Reuters alt=Smartphone maker Xiaomi has bid for a online bank licence in Singapore as part of a consortium. Photo: Reuters

Xiaomi and AMTD had earlier successfully teamed up to form a 90:10 joint venture for a virtual bank licence in Hong Kong. Airstar Bank will start operations this year.

"Singapore is the pivotal base of fintech development in Southeast Asia," said Hong Feng, co-founder and senior vice-president of Xiaomi.

James Lloyd, partner and Asia-Pacific fintech leader at EY, said that the imminent launch of virtual banks was not a "game-changer" for the Singapore market as many traditional banks already offer digital banking services, but the latest move could still benefit customers by adding more competitive pressure in the industry.

He also said that the terms of the new digital banks in Singapore were more restrictive than Hong Kong, pointing to the lack of access to ATMs.

"One key difference is the size of the addressable market. Not only is Hong Kong a bigger banking market, but there exists a medium-term opportunity of accessing the Greater Bay Area. Such a wider market opportunity does not exist in the Singaporean context," he said.

He added that other Southeast Asia markets such as Malaysia were launching their own digital banks thereby limiting the opportunities for Singapore-based digital banks to compete in the region.

Other applicants who have publicly said that they were bidding for a digital bank licence in Singapore include a joint venture between ride-hailing platform Grab and Singapore Telecommunications, a consortium led by gaming firm Razer, and consumer internet company Sea.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

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