The Monetary Authority of Singapore (MAS) is reportedly weighing up a scheme that would allow digital-only banks to obtain a license, under proposals for a new licensing regime in the country.
The de facto central bank, which also oversees regulation of fintech and financial services in Singapore, is reported to be examining how digital banks emerging from non-banking origins can operate in a risk-managed environment, under a new system of regulation.
The proposals were referenced by a spokesperson from the MAS who was quoted by The Business Times suggesting the central bank was exploring the risks and opportunities of a possible virtual banking licensing system.
It comes with clarification from the regulator that locally domiciled banks have been permitted to set up subsidiaries to focus on digital-only services since as far back as 2000.
The regulator said that in the current environment, consumers were well served by a diverse range of global digital and non-digital providers. They continued to suggest banks were working with the fintech sector to promote innovation in the sector.
The spokesperson noted, “That said, banks are not alone in harnessing digitalisation. Technology and other non-bank firms have been making large digital strides, and they have brought substantive value to their customers in doing so.”
The statement comes in response to a number of fintech firms based in Singapore who have started banks, either in partnership with existing banking institutions or in alternative formations.
According to the spokesperson for the MAS, the regulator will now research the ‘unique value’ these banks can offer over existing licensed options.
“MAS is studying whether to admit such digital-only banks with non-bank parentage. We have been engaging relevant stakeholders to ascertain the unique value that such entrants could bring to our banking landscape, and understand how potential risks will be managed and contained,” the spokesperson said.
The comments echo with a growing global trend towards more regulation for virtual banks and other fintech companies, as regulators look to tighten their control of the sector. With schemes like the proposed virtual bank license, the hope is that regulators can encourage fledgling digital banks in a regulated compliance environment, with appropriate risk control to protect consumers.
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