What did Singapore’s digital banks do?
It has been six months since the Monetary Authority of Singapore (MAS) announced the four successful candidates for Singapore’s top digital banks.
A consortium Grab-Singtel and SeaMoney (a 100% owned entity by Sea Group) have been granted full digital banking (DFB) licenses to provide banking services to individuals and businesses.
Meanwhile, Ant Group and a consortium led by Greenland Financial Holdings have secured digital wholesale banking (DWB) licenses to serve the financial needs of small and medium-sized businesses (SMEs).
While digital banks are only expected to become operational in 2022, notable developments have taken place since the licensing announcement in December of last year.
Here are the notable developments for the respective licensees.
The biggest news in the tech ecosystem in the first quarter was Grab’s merger with Special Purpose Acquisition Company (SPAC) Altimeter Growth Corp and its impending listing in the United States.
In addition to valuing the Southeast Asian super app at nearly $ 40 billion, $ 4 billion would be added into the company’s coffers through a public equity private investment agreement (PIPE) involving companies such as BlackRock, Morgan Stanley and Temasek. Vague presentation to investors of Grab revealed the funding would be used as “growth capital”.
Still, it can reasonably be expected that a significant amount will be paid to Grab Financial Group (GFG) – the fintech arm of the company that oversees the development of its digital banking consortium with Singtel. Grab owns a 60% stake in the joint venture, with Singtel owning the remaining 40%.
Ahead of its parent company’s SPAC frenzy in April, GFG raised US $ 300 million in a Series A led by South Korean asset management firm Hanwha Asset Management in January this year. This was GFG’s first external investment.
The sheer amount of funding Grab has secured shouldn’t come as a surprise. Starting a digital bank is a capital intensive business. When operational, a DFB must have a minimum paid-up capital of S $ 1.5 billion (US $ 1.12 billion). DBS Group Research and Citi believe that Singtel, for its part, should to commit S $ 600 million (US $ 300 million) in total for its digital bank.
Grab being the majority shareholder of the JV, she spearheaded the recruitment efforts for the digital bank.
Along with the announcement of MAS’s license in December last year, Grab announced Charles Wong as CEO of digital banking and indicated that he would occupy around 200 positions in his digital banking team. Wong had spent nearly two decades at Citi and most recently was the managing director of its retail banking arm.
Meanwhile, the new roles cover a variety of functions ranging from products and data to finance and compliance.
Grab accelerated its hiring plans by announcing in February a partnership with the Infocomm Media Authority of Singapore (IMDA) and Digital Industry Singapore (DIS) to create 350 new jobs to support its growth plans, which it said includes the development of the digital future. banking consortium.
A check on Grab’s careers page showed that the company is still actively recruiting for its digital banking team at varying levels of seniority.
At the time of writing this report, there were 80 vacancies, including senior positions such as Chief Risk Officer (which the page said was equivalent to MD).
A search of Singtel’s careers page did not reveal any specific role for digital banking.
Compared to Grab-Singtel, Sea has been quieter on its digital banking developments.
The new star was Shopee, the e-commerce arm of Sea acquisition from Indonesian lender Bank Kesejahteraan Ekonomi (Bank BKE) in January, with the intention of turning the latter into a digital bank.
While the Indonesian Financial Services Authority (OJK) is expected to release a new set of regulations for digital banks in mid-2021, Sea’s digital banking ambitions in Indonesia are likely to be strategically linked to its similar business in Singapore. .
In one MAS A document detailing the eligibility criteria and requirements for digital banks, it was stated that licensees were only allowed to operate in a maximum of two foreign markets, subject to regulatory approval.
Therefore, Sea’s digital bank in Singapore is expected to serve as the regional base for the group’s digital banking operations.
While the country’s small domestic market hinders the growth of digital banks, Singapore’s regulatory practices for transforming itself and its international position within the financial services ecosystem make it an ideal country to launch digital banking services.
On the hiring front, a search of the careers page of SeaMoney (the financial arm of Sea Group) revealed 15 openings specific to digital banks across all departments, including risk management, partnerships and operations. .
Group of ants
The most significant development outside the Ant Group’s camp has been the crackdown by its home authorities.
As part of a larger effort to curb the influence of tech giants, Chinese authorities have directed Ant Group to become a regulated financial holding company, subjecting it to regulations similar to those governing banks.
However, the move is unlikely to harm Ant’s digital banking operations given it involves operations in China.
Nonetheless, it is an unwanted distraction for the business. The suspended IPO is said to have blocked the company’s public funding, where a portion of the proceeds from the funding would likely be directed to its digital banking operations in Singapore.
The company is lagging behind Grab-Singtel and Sea in its local recruiting efforts.
Despite a report posted in January, saying the company will ramp up hiring in the “next few weeks”, citing a recruiter with knowledge of the company, there were only three local digital banking jobs on its careers website at the time of writing .
There could be a reason for the slow recruitment of Ant.
Of the four licensees, Ant has arguably the most in-depth expertise in digital financial services given its success in China.
Therefore, the company could only need a lean local team to support its digital banking operations in Singapore, with the bulk of operations being handled by its experienced Chinese team.
Eyebrows were raised when the consortium, titled by Greenland Financial, beat more established players, including Razer, to land the DWB license.
The nascence of the consortium continues to this day. Other than the license announcement, the consortium’s digital banking efforts have received little coverage.
Shanghai Daily reported in April, Greenland Financial was preparing for a separate stock listing. Its parent company, state-owned real estate company Greenland Group, is currently listed on the Shanghai Stock Exchange.
Meanwhile, Linklogis, one of the two other companies in the consortium, deposit for an April IPO on the Hong Kong Stock Exchange, raising up to US $ 1 billion.
Other than that, there has been no news on the hiring or digital banking related efforts from the consortium.
While there have been some notable developments in the first six months of the announcement, more are expected to emerge as digital banks prepare to be operational by 2022.
While MAS has not released any public statements regarding the development of digital banks since the watershed licensing announcement, we expect that to change in the second half of this year.
It will be necessary for the authorities to educate the public about the services provided by these digital banks and ensure that they are well received by the market next year.