Alibaba Group's financial tech arm Ant Financial has now applied for a digital wholesale banking license in Singapore. The Chinese Fintech giant has joined other tech companies such as Razer and Grab in a bid to acquire digital lending market share to tap into Singapore's growing virtual banking users.
Ant Financial, along with gaming startup company Razer and ride-hailing firm Grab, all submitted their application for the virtual license on the same week. Ant Financial officially made the announcement of its submission on Thursday. A spokesperson for the company confirmed that it has submitted an application to the Monetary Authority of Singapore (MAS) for a digital wholesale banking license.
Razer and its partners, supermarket chain operator Lim Brothers and insurance firm FWD, applied for a full digital baking license on the same day as Ant Financial. The consortium of companies plans to launch its services in Singapore through Razer's Fintech arm, Razer Fintech. If approved, the company announced that it will be establishing the world's first global youth bank called the Razer Youth Bank.
Ride-hailing operator Grab Holdings and its partner Singapore Telecommunications were the first to submit their application to the MAS. Both companies announced their joint bid on Monday. Grab will reportedly hold a 60 percent stake in the joint venture, while Singapore Telecommunications will own the rest.
The MAS originally announced in June that it will be granting up to five virtual banking licenses to foreign companies. The agency explained that the granting of the licenses to foreign players is meant to increase competition, thus spurring innovation in the budding sector.
Two out of the five licenses will be full banking licenses that allow companies to provide a wide range of virtual financial services to both retail and non-retail customers. The full license will require applicants to have a starting capital of $1.1 billion. The other three licenses will be wholesale licenses that will allow companies to service small to medium enterprise and non-retail customers. The starting capital for the wholesale license will be $100 million.
Analysts have pointed out that Singapore already has an existing and robust virtual banking market served by local startups. Foreign players will have to bring all of their latest innovations to the table if they want to differentiate themselves from local competitors.
Singapore's decision to open up its virtual banking industry to the foreign tech companies comes at the heels of Hong Kong's similar action at the start of last year. Ant Financial, along with fellow Chinese firm Tencent Holdings, was able to acquire licenses in the city.
The digital lending market in Southeast Asian countries is expected to grow exponentially in the coming years. Last year, the market was worth around $23 billion, with analysts predicting the market to grow by around $110 billion by 2025.
