Allow virtual banks, but maintain fair play and manage new risks

GOOD regulations distinguish the nature of an activity from its wrapper, and the Monetary Authority of Singapore (MAS) should therefore be willing to issue virtual banking licences to businesses that do not have traditional banking roots.

The purpose of a virtual banking licensing regime should be to encourage innovation; ensure a level playing field between online-only digital banks and brick-and-mortar incumbents; and maintain robust risk management in the financial marketplace.

Singapore's financial sector regulator said last week that it was studying a licensing regime that will allow the operation of digital-only banks by companies with "non-bank" parentage. It was no coincidence that, shortly after that news, reports emerged about super app aspirant Grab looking for strategic partners as it explored a potential spin-off for its financial services arm.