Asean's new digital banks will be valued like traditional banks, not pure Internet plays: report

ASEAN is seeing a new wave of digital banks that may continue for years. While these young startups may start with "optimistic" Internet valuations, they will, over time, converge to valuations that traditional banks are used to, said Citi in a report on Tuesday.

A key difference between a licensed bank and an Internet platform model is that a bank is subject to strict capital and other regulatory requirements.

This means banks are not so easily cost-scalable, and aggressive balance sheet growth can be expensive in terms of high cost of fresh common equity, especially if the bank is loss-making in the early years.