Singapore's digibank experiment is right balance of innovation and prudence

THE buzz behind digital banking in Singapore speaks to the belief that small-and-medium-sized enterprises (SMEs) here and in the region can be better served by technology and the use of alternative data to back smaller forms of unsecured lending that has been largely shunned by the incumbent banks.

The latest step by Singapore - marking the biggest liberalisation move in the financial sector since 1999 - is also a risk-adjusted experiment in injecting innovation.

The calibrated approach by the Singapore regulators suggests a targeted look at addressing funding needs but not one that creates disproportionate risk, judging by the more prescribed rules as well as the high capital requirements for digital bank aspirants.