China's Ant Financial Services Group, an affiliate of the Alibaba Group, is reportedly planning to apply for a virtual banking license in Singapore. If the company is granted the license, it could become one of the biggest players in the race to dominate Singapore's lucrative market.
The Hangzhou-based financial tech company announced this week that it is actively looking into acquiring a license to operate a virtual bank in Singapore. The announcement follows Singapore's previous statement that it would be issuing up to five virtual banking permits to open up the industry to outside competitors. The Monetary Authority of Singapore plans to issue the permits to existing non-banking institutions.
If Ant Financial, China's highest-valued financial tech company, manages to enter the Singapore market, it would become a formidable competitor to existing domestic players. Among those that the company is expected to against will include traditional incumbents such as Oversea-Chinese Banking Corp and DBS Group holdings.
Ant Financial, which currently has a market valuation of more than $150 billion, did not immediately disclose if it would be applying for a retail or wholesale license. However, analysts expect the company to apply for a wholesale license in Singapore given the required conditions are much easier to meet.
Singapore's move to further open up its banking markets to tech startups comes at the heels of Hong Kong's opening-up measures. Hong Kong recently issued permits to several financial tech companies earlier this year. Both Ant Financial and Tencent Holdings had obtained licenses to operate in the city. Ant SME Services, a unit of Ant Financial, received its license to operate in Hong Kong back in May.
Singapore likely saw the advantages of the entry of "big tech" banks into its banking industry, which is why it will likely following Hong Kong's footsteps in this regard. Singapore is currently offering a total of five permits, two for full digital banks and three for wholesale banks.
The full digital banking licenses will allow companies to serve all kinds of customers. The license will also come with a required $1.1 billion capital minimum. Meanwhile, the three wholesale digital banking licenses will be open to foreign non-banking institutions with a minimum capital requirement of $100 million.
So far, the only companies that have expressed interest in applying for a license aside from Ant Financial are Southeast Asia's second-largest lender OCBC. The company has reportedly agreed to partner with peer-to-peer lender Validus Capital and Temasek Holdings in seeking a license for a possible joint venture in Singapore.
