New chapter in Singapore banking

THIS WEEK'S TOPIC: How do you see the impact of digital banks in Singapore? What potential risks should we watch for?

Cheung Pui Yuen Chief Executive Officer Deloitte Singapore

We expect digital banks to come up with innovative products and delivery channels to serve Singapore and its people. The key for digital banks is to identify unmet needs and address them. When they succeed, they will move Singapore closer to its Smart Nation vision.

Digital banks will also give the traditional banks some healthy competition, and push them to continue with their digital transformations. From a consumer perspective, people can look forward to innovation and more seamless delivery in terms of products and services as both the digital and traditional banks compete for their wallet share.

Digital banks, with their lower cost base and more efficient operations, can also potentially reduce transaction costs for consumers. Given the nature of digital banks, technology, data as well as money laundering and terrorist financing risks would be areas of focus. Digital banks must show that they can manage these risks well, to meet regulatory expectations and win their customers' trust.

Victor Mills Chief Executive Singapore International Chamber of Commerce

The impact will be positive. The new digital banks will be innovative and will create more consumer choice adding a new dimension to banking in Singapore. Digital and non-digital banks will learn from one another. They will do so by competing, collaborating, and by partnering. We can expect a slew of interesting product offerings. With the Monetary Authority of Singapore standing guard to protect a vital sector of our economy, you can be sure risks will be well managed and the new players well regulated. The MAS and all banks know you can't ignore technological advances. You must embrace them or face irrelevance.

Edmund Sim Founder and CEO Credit Culture

The digitalisation of banking solutions is inevitable, and the issuance of these digital banking licences is a step closer to this eventuality. Fintech solutions in the personal lending space have already shown that improved and streamlined processes can result in a reduction of manpower overheads by more than 600 per cent. The challenge for digital banks will be in attracting and growing the customer base to a sizeable scale. Digital banks must be prepared to pass on those savings from overheads to consumers as well as widen the pool to allow other underserved audiences access to funds for that to happen. If the balance is right, such banks can contribute to greater financial inclusion with lower operating costs and the ability to serve those not typically served by traditional banks.

Lionel Lim VP and MD, APAC and Japan Pivotal

Digital banking will open a plethora of opportunities and new features for consumers and businesses who now expect to transact round-the-clock. What is imperative is how digital banks can deliver services that are both seamless and secure. Traditional cybersecurity methods are losing their effectiveness and organisations must relook at how cybersecurity is approached. With security breaches getting increasingly costly, digital banks need to establish modern platforms and culture. This means adopting agile methodologies, revamping architectural approach, and tighter collaborations between IT and operations teams. Those that achieve these will enjoy reduced downtime, time-to-market and ultimately, better user experiences.

Jayaprakash Jagateesan Chief Executive Officer RHT Holdings Pte Ltd

The impact may only be incremental if new digital banks simply compete on cost to get customers in a well-banked market to switch over without really offering innovative solutions.

Through the course of RHT Holdings' business in financial services and technology, we understand that businesses and individuals are not just looking for digitalised banking services. They need an encompassing, integrated and coordinated system that enables low-cost and user-friendly transactions. If digital banks become solely focused on gaining market share and slashing costs, we risk missing an opportunity to achieve true digital banking which should not only be cashless, but also paperless, plastic-free and hassle-free.

Yeoh Oon Jin Executive Chairman PwC Singapore

If successfully implemented, the digital banks regime will broaden the existing financial system in Singapore. Niche customer pain points can be addressed in a sustainable manner through innovative technology platforms. An example is SMEs' demand for speedier and cheaper loans. With new players, consumer demands are likely to be responded to more quickly. Digital banks can also rapidly scale up to capitalise on further liberalisation of the sector in the Asean region. However, there are risks. Fortunately, these risks have largely been factored into the evaluation criteria of these digital banks such as irresponsible pricing for short-term customer acquisition, unsustainable business models that leave customers stranded, etc.

John Lee Country CEO Maybank Singapore

Singapore is at the forefront of digitalising its economy through its Smart Nation initiatives. Hence, the offering of new digital banking licences is not surprising given other countries have also issued such licences. Digital banks will rev up competition, and competition accelerates continuous improvements and upgrades, which ultimately benefits the consumers. Incumbent banks, like Maybank, welcome this competition to spur more innovations and provide better service to consumers.

At Maybank, we have a holistic digital strategy in place that leverages our existing strengths to enhance our competitive edge by building new digital capabilities, as well as capturing new opportunities aligned with industry-driven initiatives. We believe that trust and relationship-building remain the two most important drivers of banking services, which digital banks would have to establish beyond being innovative and offering cheaper price.

Naveen Menon President, ASEAN Cisco

Radical transformation has been taking place in banking for the past decade. Cisco has enabled customer-driven innovation from e-banking, multichannel integration, omni-channel strategies and now the Internet of Everything. As digital banks become a reality, there are three clear areas of disruption ahead.

Firstly, the delivery of intelligent customer engagement. Online interactions provide banks invaluable data-driven insights to cultivate stronger and deeper customer relationships which can help them generate new revenue streams. As Singaporeans change the way we shop, pay our bills and manage our finances, traditional banks must regain their relevance by taking advantage of new technology to evolve their customer relationships. This means transforming the bank branch of the future to create a retail-like experience that achieves customer delight.

User experience will not only take centrestage in B2C banking but also in B2B banking as low-touch, high-impact models yield a higher return on equity. This presents enormous opportunities across multiple demographics and levels of technology adoption.

Song Tang Yih Vice President, APAC Sales A10 Networks

Digital banks will have a positive economic impact for Singapore. It will power startups and smaller businesses while further strengthening Singapore as Asia's leading financial and technological hub. However, these achievements will also put a target on our backs for cyberattacks, especially as the nation transitions towards hyper-connectivity with 5G.

Already this year, we saw a state-sponsored attack against Chilean ATM networks - a chilling reminder of how cyberthreats will only evolve as the industry goes digital. With the rise in multi-vector attacks and the chronic shortage of qualified security professionals, the economics of cyberattacks are very much slanted in favour of the attackers.

Digital-first businesses today need more efficient tools and advanced technologies to balance this equation. This includes machine learning algorithms and heuristic behaviour analysis that can identify attack patterns. They must also deploy intelligently automated defences that can accomplish tasks autonomously. Manual intervention response time will be too slow, resource-intensive, and ineffective - resulting in greater potential of network downtime and high costs to the organisation.

Teong Eng Guan Vice President, ASEAN Palo Alto Networks

Digital-only banks present an opportunity to address customer needs currently unmet by incumbents. Through their differentiated business model, users will have easier access to a wider range of financial services. While there is great potential for these new entrants to flourish, as they have in other parts of the world, securing sensitive data remains a top priority. Digital-only banks will have to be proactive in addressing security issues in order to gain the same level of trust and credibility and compete with incumbents, who typically have more resources and experience dealing with cyberthreats.

Max Loh Country Managing Partner, Singapore and Brunei EY

In issuing digital bank licences, Singapore has reaffirmed itself as a leading example of regulators collaborating with industry players, ecosystem partners, and potential entrants to the market to promote innovation and create choices for consumers. Consumers aren't the only beneficiaries. The economic impact is much wider as SMEs, who form the backbone of Singapore's economy, could be among the biggest winners. With more banking service providers, SMEs potentially get more diverse services with more competitive pricing. Customers will be looking for guarantees of financial and data security, user-friendly interfaces and quick fixes to issues that may arise. Digital banks will have to work on addressing attendant risks so as to earn customers' trust.

Sanjay K Deshmukh VP and MD, SEAK VMware Singapore Pte Ltd

The new digital bank licences mark the next chapter in Singapore's banking liberalisation journey and a great forward-thinking step that can create an innovative, resilient and competitive environment while maintaining trust and stability - hallmarks of the Singapore banking system.

Fundamental to progress is the right infrastructure and the right approach. While a pragmatic paced-out approach will strengthen the resilience of the banking system, businesses should continue to prioritise on leveraging the right digital foundation that can help them create new value, protect branding and trust, and transform engagement through technology platforms to empower our businesses to go farther, faster.

Sandie Overtveld Vice President, APAC Zendesk

Digital banks are quickly becoming the Ubers of the banking industry. They are putting the customer back at the centre of their business model, and have the power to scale and accelerate the way we transact and manage our money at a rapid pace. In Singapore, the impact will be similar - it will drive traditional banks to break free from legacy infrastructure and archaic processes and become more agile and responsive to customer needs and expectations. We are already seeing these shifts in markets like Australia with the launch of Xinja, and Starling in the UK.

I believe the benefits far outweigh the risks, with the biggest risks being not keeping up with this new pace of change, and failing to learn from the past and remembering what made banking inherently difficult and frustrating. Whether you are a traditional bank or a digital one, the new measure of success will be constantly improving the customer experience.

Rakesh Krishnamuti Country Manager, Singapore PayPal

As a global leader in digital payments, PayPal sees the rise of digital banks as another major impetus in the nation's drive towards a more cashless society. Digital payment platforms have long empowered small business owners and freelancers to tap into cross-border opportunities. Similarly, digital banks will bring more economic opportunities for merchants. As for consumers, they will also have more choices when it comes to accessing financial services. This is a positive development, and we believe these new market participants will help build and grow the fintech ecosystem, enabling Singapore to become a smart nation.

Vikas Nahata Co-Founder and Executive Chairman Validus Capital

Digital banks have the ability to transform Singapore's banking and financial services, creating a more competitive landscape for new, innovative products and services that better serve consumers and businesses.

As Validus continues to drive financial inclusion for South-east Asia's SMEs, we naturally welcome this positive development and will be applying for a digital banking licence with MAS. Our strength in using technology and data, as well as forming strong partnerships with banks and corporates, positions us well to create a 360-degree solution tailored to SMEs. We believe that Singapore's financial ecosystem will be able to benefit and develop trust in digital banks as long as they have the right partners, talents, data security and infrastructure in place.

Dileep Nair Independent Director Thakral Corporation Limited

Singapore has bold Smart Nation aspirations. But we seem slow in allowing digital-only banks even though these already operate in many Western countries, China, Japan and South Korea. No doubt our traditional banks do offer digital services but it is the digital-only banks - without brick-and-mortar branch overheads as well as legacy systems - that are able to pass on the benefits such as higher interest rates to depositors, 24/7 customer support, bespoke notifications and other value-added services. Most important is the innovation that such entities spur within the banking industry.

Of course, regulatory requirements must be fully met by the virtual banks. Trust must also be there for the public and businesses to use their services. If such trust is based purely on brand-recognition of any "tech giant" behind the bank, care must be taken to ensure the financial solvency of that tech company. It pays to remember the dotcom crash in early 2000.

Leon Perera Chief Executive Officer Spire Research and Consulting

Competition from digital banks is a welcome development. Globally, more and more countries are issuing full bank licences to digital-only banks. Not having many physical branches and ATM terminals to maintain could mean lower costs that can be passed onto the consumer. However, non-bank players entering the highly regulated banking space for the first time will face a steep learning curve in respect of managing financial risks and maintaining cyber-security. Regulators would do well to work closely with licensed digital banks to meet these challenges while also, in time, developing a footprint in the region from a hub in Singapore.

Lee Fook Chiew Chief Executive Officer Institute of Singapore Chartered Accountants (ISCA)

The introduction of digital banks should further promote healthy competition and innovation in the banking sector as well as collaboration between financial and technology companies. At the same time, traditional banking players may adapt their business models to maintain their competitive advantage. The emergence of digital banks will also accelerate the establishment of more defined regulatory regimes around fintech, digital banking and lending. In terms of audit requirements, certain traditional audit approaches may not work and will need to keep up accordingly. Furthermore, the audit of IT security, systems logic and algorithms may become more prominent.

Key to the success of the digital banking regime is to ensure a fair playing field between incumbents and the new entrants, while not being overly punitive with high barriers to entry that make digital banks uncompetitive. Hence, it may be necessary to evolve regulations concerning capital and liquidity requirements as well as the approach towards calculating risk- weighted assets.

Sanjay Aurora MD, Asia Pacific Darktrace

Digital-only banks will be charged with not only the enormous responsibility of securing sensitive consumer data, but also with ensuring service continuity - even if outside of typical business hours.

As we move banks to the digital realm, we must be prepared to fight back against cyberattacks that could strike at any time of day - hackers won't keep a 9 to 5 schedule. Artificial intelligence is now capable of taking action on behalf of human security teams, neutralising the threat while still allowing normal business processes to function.

For digital-only banks, AI autonomous response won't be a nice-to-have - it will be business-critical.

Alfred Lee Managing Director Refinitiv Asia Pacific

Investments in financial infrastructure and technology ecosystems will help ensure not only that Singapore remains a world-class financial hub but also that these benefits filter throughout the economy to citizens and SMEs currently experiencing barriers to access.

As Singapore prepares for the next chapter in its banking liberalisation journey, it would be remiss not to note the importance of back-end technology that can mitigate financial crime risks without impacting the user experience. The rise of virtual banking will require high-quality "Know Your Customer" screening and data analytics to ensure a seamless experience for users. Digital banks that can incorporate accurate identity verification services on mobile phones and combine that with high-quality KYC screening functionality and data analytics technologies will be in the best position to take advantage of the government's digital initiatives.

Sagar Sarbhai Head of Government and Regulatory Affairs, APAC Ripple

With non-bank players - such as telcos and tech giants - looking to apply for the five digital bank licences, the financial services industry will undoubtedly become even more competitive. This is a step in the right direction, and MAS' forward-looking approach to financial innovation can only mean more choices for consumers, and perhaps spur banks to continue to digitalise and offer better, cheaper and faster solutions to keep their customers. Herein lies the opportunity for fintech companies to work with the banking and financial institution incumbents and enable them to deliver these solutions. In the long run, this leads to the creation of multiple financial partnerships and networks which will in turn create a more robust, vibrant and innovative banking ecosystem in Singapore - comprising a mix of digital banks and traditional banks that have successfully digitalised.

Dan McConaghy President, Asia Pacific FICO

The entrance of digital banks to the Singapore market will increase competition and benefit consumers. Globally, fintechs and challenger banks have disrupted the status quo in the financial services. By developing compelling new products, services and experiences, these companies have set a new standard and raised customer expectations. Traditional banks now find themselves needing to rethink and redesign their services, to transform themselves digitally, and meet the market. While I think Singapore's banks are some of the most advanced in the world, the potential entrance of players like Grab, Singtel and others will see further innovation and competition in specific segments of the market like digital payments and personal loans.

Dylan Castagne Managing Director Retarus Asia

The underlying premise of such digital transformation has been to provide improved customer experience - and a digital bank will offer access to financial services on a more personal level. However, this move also presents a new gateway for cybercriminals. Offering more access points to financial information, while improving customer experience, equally provides cybercriminals additional entry points for attack. Having more enhanced cybersecurity guardrails is thus imperative for digital banks to retain the trust of its customers and comply with government regulations. As customer-centricity takes front and centre, providing real-time customer service coupled with high-level cybersecurity will be extremely critical in ensuring digital banks' success.

Goh Puay Cheh Executive Director The Institute of Internal Auditors Singapore

The issuance of new digital bank licences will allow for greater competition and spur greater innovation in banking. We will see competition between new and traditional banking business models, new players and existing ones, and leveraging technology to serve business and individual customers better. Consumers should benefit from improved convenience and potentially cheaper and more innovative banking products.

Safeguards must be in place against the risks associated with digitalisation such as identity frauds, data privacy breaches, cybersecurity and regulatory compliance issues. Singapore's position as a leading financial centre owes much to the stability of its financial system and the robustness of its regulatory infrastructure. So, while we embrace the emergence of new digital players, it is imperative that we maintain trust and confidence in our banking system and the regulator.

George Lee VP, Asia Pacific & Japan RSA

The new digital bank licences marks a new chapter in Singapore's banking liberalisation journey. It encourages innovation and opens up infinite possibilities for organisations to provide customers new ways to conduct financial businesses. However, this expansion of banking channels also spurs a slew of digital risks in customer identity and authentication, omni-channel architectures, as well as fraud and compliance.

Therefore, the critical next step is to ensure organisations understand that opportunity and risk are two sides of the same coin, and that the ability to manage risk will not merely be a way to avoid losing, but the foundation laid in order to embrace new opportunities and win in this age of banking transformation.

Imad Abou Haidar Managing Director, APAC Finastra

Customers' expectations to have access to "online or mobile-enabled" banking is the key driver for the implementation of digital initiatives and fintech adoption in Singapore, according to Finastra's latest research. The rise of digital banks here will now force financial institutions, as well as businesses across all industries, to rethink the way customers are serviced, and further accelerate transformation to better delight customers. While a differentiated customer experience is key to winning in digital banking, it must not come at the cost of security and protection. Operating exclusively online, areas such as technology risk, cybersecurity, and customer data protection will become more important for virtual banks. As banking goes beyond technology, the new bank operators will also face bigger challenges in risk management and regulatory compliance for financial services.

Kunal Chatterjee Country Manager for Singapore & Brunei Visa

The opening up of digital licences in Singapore will encourage open collaborations from new players that will fuel more robust innovation, where consumers and businesses, who are underbanked today, will benefit from greater convenience and better user experiences. With this open environment, the reliability and security of payments will be crucial to ensure that consumers and businesses continue to develop confidence and trust in the ecosystem.

For newly developed digital banks, they will need to increase their digital capabilities such as issuance of virtual cards, biometric authentication and e-KYC as part of enabling better consumer user experiences. Visa as a global payments company is ready to partner with both existing financial institutions and new entrants in the market who are applying for digital banking licences, to provide our expertise in these areas, and provide seamless and secure payments for everyone and everywhere.

Mario Singh CEO Fullerton Markets

With fintech advancing at a rapid pace, the announcement by MAS to issue up to five digital banking licences is certainly welcome news. This major initiative is also in line with the masterplan of ASEAN Connectivity 2025, where the 10 Asean heads of state pledge to build a competitive, resilient and well-connected region.

In the recent World Payments Report 2018 by Capgemini and BNP Paribas, the total value of digital payments is projected to reach around US$876 billion by 2021. While the opportunities are immense, there are three potential risks to look out for:

1) Fraud - Identity verification will be solely reliant on passwords and security questions which can be hacked.

2) Tax evasion - It will be harder to detect if companies or individuals do not disclose full payment transactions for tax purposes.

3) System conflicts - Technical glitches and system errors are always a risk when number of transactions and number of users increase.

Vincent Goh SVP, Asia Pacific & Japan CyberArk

New digital banks need to adapt their business strategies to comply with the financial regulations imposed by the relevant authorities, especially when it comes to safeguarding the cloud network infrastructure. As financial transactions increasingly take place online, higher levels of vigilance will be required from all stakeholders to protect against cyberattackers who are seeking the valuable information associated with banking transactions. Focusing on delivering excellent value and experiences to customer is of paramount importance, but data security must underpin and be an integral part of the finance service delivery process.

Praveen Kumar General Manager APAC ASG Technologies

As Singapore embarks on the next stage of its banking liberalisation journey, it must recognise that this extra convenience and choice for customers bring added risks of data leakage. The new digital banks must have strict data protection policies including the ability to discover, redact, store and deliver content and data in a secure manner. Like any industry that collects valuable data on customers, they need to invest in advanced data management and data privacy protection to ensure data security and traceability on the data / content collected from customers. It will take only one major data breach for confidence in the digital banking initiative to be broken. Data governance (including data management) needs to be a priority today.

Stephanie Boo MD, Asia Pacific Menlo Security

The introduction of digital banks can be seen as a positive move in the banking industry. The disruption will provide alternative options which will allow for healthy competition with the traditional banks to spur them to be more competitive. This will force the banks to reinvent themselves or adopt newer technologies, presenting opportunities for startups and technopreneurs and creating a vibrant digital banking ecosystem.

As with any new venture in the digital world, cybersecurity, data governance and trust come into play. The question of responsibility for and security of the customers' data is paramount. Who shall be responsible for it and how can industry players work together to ensure transactions and interactions are secure from cyberthreats and attacks. Those risks need to be managed effectively and cohesively.

Grace Ho Area VP, ASEAN and Chief of Staff, APAC Commvault

The digital-native consumer across the world now expects to have reliable and efficient options when it comes to their banking service options. This represents an accelerating digital culture that the traditional banks in Singapore have been on for a while. Digital banks with advanced technology will bring new levels of customer experience and new products just like what we have seen in many other consumer sectors, such as ride-hailing applications in transportation. Trust will be a critical differential in this sector with data breach and cybersecurity-related risks. Service providers are also impacted and we need to adapt and be agile to bring the right data protection and recovery tools for our customers to mitigate these risks.

Amit Gupta CEO and Founder Ecosystm

Customers should be the big winners, benefitting from a far superior customer experience when they are able to transact and manage their finances easier and faster. As a mobile-first service, and with the help of AI, the range of products and services digital banks can offer will be more personalised. Similarly, the KYC function could be done very differently from traditional banks.

That said, security and privacy will be a significant concern until digital banks can demonstrate that their cybersecurity systems can secure user data and financial transactions. The entry of non-banking players into digital banking could give them more access and control of data, thus furthering data monopolies.

Andrew Dodd Managing Partner EarthStream Global Pte Ltd

Our technology brand CloudStream is heavily involved in the emergence of challenger banks that are rapidly disrupting the traditional financial institutional environment. We see a conflict where digital banking licence holders that are linked to the bank struggle with the compliance and regulation of the financial services market. These challenger banks need to be as nimble and agile as a startup, but as regulated and secure as a traditional banking application platform.

Our organisation has recently helped establish one of the challenger banks that has gained licencing in Hong Kong in March this year and they are now developing a suite of new applications that will roll out towards the end of 2019. It will be interesting to see whether digital banking applications will replace third party money transfer applications.

We believe the next logical step is to secure digital banking transactions by implementing blockchain technology. In addition, the use of Deep Learning Algorithms on digital payment transactions will help to track and pinpoint fraudulent transactions. It will cut down cost of money transactions between the banks and increase security and trust in the platforms. We do however see a clear risk that unless a high standard of security regulations is implemented, cybercriminals could exploit access to consumer data and undermine trust in virtual banking.

Craig Nielsen Vice-President, Asia-Pacific McAfee

Both consumers and enterprises stand to benefit from the presence of digital banks. As a cloud-based service, digital banks have the ability to customise innovative solutions and react rapidly to customers' changing needs. There is potential for rapid scalability and deep insights, which allow for a data-driven, customer-centric approach without significant costs.

However, with data hosted predominantly in the cloud, digital banks need to have a cloud policy that tackles a multitude of cloud platform-related risks. Worryingly, McAfee's recent Cloud Adoption and Risk Report found that only 35 per cent of APAC organisations surveyed could enforce data loss prevention, and only 36 per cent had control over how their data is shared in the cloud. Digital banks should ensure they put in place capabilities to extend their data loss and data protection policies across their SAAS, PAAS and IAAS platforms.

Maren Schweizer Director Schweizer World Pte Ltd

When today's customers evaluate financial institutions, they don't compare different banks anymore, they compare experiences. Whether we like it or not, technology is a key part of banking services today. We are becoming reliant on technology with each passing minute - especially in a world of smart digital platforms that power these superior experiences.

Regarding risks, I see the need to manage governance, big data and cybersecurity together.

An effective data governance approach has grown in importance due to significant data overload. Cybersecurity challenges continue to know no bounds, and new digital banking platforms shall be designed with these in mind. Singapore is well-positioned to kick off new regulations hand-in-hand with digital banking licences and set standards for other countries in Asean, if not around the world.

Helen Ng CEO Lock+Store

This marks a crucial milestone in the liberalisation of Singapore's banking sector. The advantages include higher interest rates, lower fees and more innovative cash withdrawal options. Traditional banks, most of which have jumped on the digitisation bandwagon with PayNow and mobile apps, will be forced to rethink their retail strategy. This does not mean that bank branches will become obsolete. Smart branches driven by digital technology and advanced analytics will evolve to boost sales and improve customer experience overall. As consumers gain more choices, we need to ensure that digital banks are subject to the same stringent data protection standards as brick-and-mortar banks.

Joanne Wong Senior Regional Director, APJ LogRhythm

As Singapore introduces digital banks and accelerates the digitisation of financial institutions (FI), an important concern remains: cyberthreats. While we have made good strides in ensuring FIs are cyber-resilient through amendments to the Technology Risk Management Guidelines, regulations need to keep up with the evolving digital landscape as well as the needs of digital banks. Compliance to regulations alone is not enough - FIs need to adopt a holistic approach to cybersecurity, to manage risks such as data breaches.

This includes ensuring that employees are well-informed on good cyber-hygiene practices, complemented with a robust cyber-incident response plan that leverages artificial intelligence and machine learning to enhance visibility of cyberthreats.

Mark Billington Regional Director, Greater China and South-East Asia ICAEW

Singapore's decision to issue up to five digital bank licences to non-bank firms represents a significant step forwards the digital transformation of the banking industry - one that is still in the early stages. As digital banks build their services on modern technology infrastructure and have a strong customer-centric approach, businesses and customers are likely to benefit from smoother and seamless processes. Their presence in the market is also likely to spur innovation amongst traditional players, who will be forced to adapt and transform to stay competitive.

Questions around security, privacy, and most importantly, social inclusion, will need to be addressed. Companies will need to put in place robust measures to ensure high levels of security and fraud prevention, while taking steps to ensure that low-income individuals and non-tech savvy customers are not excluded from its benefits. In many cases, we see that digital banks complement rather than fully replace traditional banking services.

Mark Looi Head of ASEAN ACI Worldwide

With the imminent entry of digital banks, one change we can definitely expect to see is on payments innovation. Banks, traditional and digital alike, are investing in new digital banking technology to remain competitive in today's market. As it is, banks and other players in Singapore are already increasing their investment in payment solutions - ACI Worldwide's 2018 ASEAN Payments Insight Survey found that 53 per cent of Singapore bank executives polled said their banks were expecting to increase their investments in payments solutions. This will enable the banks to launch new digital capabilities faster and more cost-efficiently, as well as deliver innovative digital products and services to their customers. This will open up a plethora of payment options for businesses and consumers alike, making payments faster, safer, and more convenient than ever before.

Dev Dhiman MD, Southeast Asia and Emerging Markets Experian

With customer expectations being influenced by service and technology innovation, even incumbents are no longer just utility players but leading the charge in redefining the future economy. This is not just true for Singapore. With growing adoption of smartphones, digital banking will become the dominant force behind promoting socio-economic financial inclusion in the region, boosting productivity, facilitating business and consumer agility and in building customer loyalty. However, there are inherent risks. With a perceptible increase in fraud and identity risks due to increasing digitalisation, security needs to be accorded prime importance, with focused investments being made in this area.

Daniel Sim Senior Director, Channel Business (Asia) Vertiv

The idea of digital banks in Singapore signifies an exciting stage in the digital transformation of the country. It is a leap towards a technological revolution that will have significant impacts on the amounts of data that will be collected, analysed and stored. The formation of digital banks will also require swift production of data as well as increase the need for its fast retrieval in more areas of business operations. We believe that at the relatively early stages of the technology's construction, it is important to create infrastructures that can meet the varying data needs of businesses to ensure their customer experience is optimised. Getting this right will be crucial to businesses being able to effectively deploy services - and for ensuring people can use these services without issue.

Dan Marjanovic Singapore Office Country Head Simmons & Simmons

The emergence of bigtech, fintech and digital banking in Singapore has the potential to disrupt the banking industry, facilitate financial innovation, and promote financial inclusion. The greatest and more immediate impact is likely to be felt first in retail banking and then at the SME level.

With the market increasingly expecting seamless service across multiple channels and across all lifecycle stages, banking services providers are now focusing on digitalisation, the adoption of best practices and the development of AI solutions, with the objective of putting retail and business customers front and centre. But high-velocity changes may leave incumbents vulnerable in the financial services landscape of the future and the move towards open APIs and cloud partnerships could result in increased data privacy and cybersecurity vulnerabilities. These and related issues are of critical importance and raise domestic and cross-border regulatory complexities.

In the digital banking age, both service providers and consumers cannot escape the need to focus on strengthening security infrastructure, adopting cyber-hygiene best practices and understanding important related tradeoffs.

Hagen Rooke Counsel, financial regulatory matters Reed Smith

The MAS' digital banking framework caters to an emerging group of firms - those who serve unmet or underserved banking needs and whose business model does not threaten to take market share from incumbent banks. As such, it is designed to accommodate only the most innovative of banking propositions.

However, this development does represent a further liberalisation of banking in Singapore, and incumbent banks will inevitably feel the competitive pressure. A key challenge for the MAS will be to balance the interests of existing banks with the need to encourage the entry of innovative newcomers into the market.

Jagdish Mahapatra Managing Director, Asia CrowdStrike

While the shift towards digital banking will offer consumers enhanced access to financial services and more personalised customer experiences, it also presents new opportunities for cybercriminals to monetise illicit activities. The move will create new challenges for digital defence, creating new attack vectors that make data protection more complicated. The pressure to adhere to regulatory compliance will also challenge already stretched financial services security teams. This will make it imperative for financial services institutions to deploy comprehensive, scalable endpoint protection with automated threat detection and deliver real-time visibility for security teams to limit any risk exposure.

Cheryl Koh Head Selby Jennings, Singapore

The liberalisation of the banking industry in Singapore is a welcome move that follows a wider agenda of digital transformation within financial services globally. There will be plenty of opportunities for both employers and employees alike, as this landmark announcement will bring in new digital business, create new roles and offer more opportunities for cross-sector collaboration. We are already working with many established digital banks and this move will create new roles not only within these companies, but within affiliated sectors such as in cybersecurity, data analytics and regulation. There will be greater scrutiny over the core skills for people entering the financial services industry today, ultimately because of an increasing demand for professionals in this sector with technological savvy and digital skills. Employers and employees should think more about how they can stand out in such a landscape.

Calvin Goh CEO and Founder Koku

Singapore's financial scene will be even more competitive with the addition of potentially five new entrants to the digital banking space. Singaporeans have a high level of financial inclusion, and the city-state is a small market, with both incumbents and new entrants competing for the same pool of customers. This situation could be similar to the energy market and put consumers at risk , with a number of new entrants having already folded and the industry going through a period of consolidation. That said, it will be interesting to see how this once-in-a-decade initiative by MAS will play out.

Lim Soon Hock Managing Director PLAN-B ICAG Pte Ltd

Digital banks will compete with and complement the traditional local banks.

They will serve the market segments that are hitherto not served before, especially the under-banked and under-served, micro businesses and even SMEs which have difficulties seeking cash flow or working capital funding.

Traditional banks are now more compelled to invest in fintech at a faster rate, if they are to ensure that their market share is not cannibalised over time. Through the adoption of fintech such as blockchain, digital banks can be expected to be more nimble, to be able to serve cross-border transactions better and to disrupt the current model of financing built on KYC.

As with any innovation, regulation is good for the industry, to prevent abuse. However, for digital banking, regulation should be of a lighter touch so as not to curb creativity and innovation. Even today's strictly regulated banking system is fraught with risks such as money-laundering, so while it is necessary to be aware of the potential risks of digital banking, such risks should not stand in the way of digital banking being introduced for the larger good of society, especially for the under-banked and the under-served.

Digital banking is here to stay, driven by blockchain, AI and data analytics. It has recently been given a strong boost with Facebook entering the arena with Libra.

Reuter Chua Head ACCA Singapore

If done right, digital banks will present new ways to fix some of the challenges with traditional banking. Fundamental ones involve lowering transaction costs by reducing overheads and improving the accessibility of banking services to the underserved. The regulatory framework needs to work with digital banks to ensure that basic laws and consumer rights are preserved, while new ways of banking and managing our finances are invented. The biggest risk facing the Singapore banking industry is inertia to change, and not embracing the opportunity to deliver new value that can benefit everyone, with a more secure, transparent and frictionless banking system.

Praba Thiagarajah Founder & Group CEO Basis Bay

With the advent of digital banking in Singapore, there will be competitive alternative offerings from both established banks and specialised fintech companies. The positive impact of digital banking includes the availability of choice and options to customers now in funding big decisions like purchasing a home or a car.

We see the digital bank licences as another banking licence and one that is inevitable in keeping with today's digitally savvy, younger customer. The licences from MAS only endorse this concept and increase the trust factor for the consumer.

As more players enter the market with the advent of cloud-based services, there is a risk of dilution and obviously data governance becomes top of mind. But ultimately we feel the digital bank licences are a positive move in the right direction for Singapore in realising its Smart Nation agenda.

Yann Hamon Managing Director why innovation!

Customers will benefit the most- besides having access to new digital products and services, eventually all incumbents will need to provide competing offers that are faster, better and cheaper.

Personal data security is the biggest risk, especially ensuring compliance for third-party vendors who will form part of the digital banking ecosystem. Customers (and the MAS) may also be concerned about the financial stability of new entrants.

For incumbents speeding up their digital transformation to compete, there is a risk in staying relevant whilst adequately servicing their existing customer base. Perhaps they can look to the first licence holders in Hong Kong for some timely lessons in managing this change.

Jessie Xia MD, Southeast Asia ThoughtWorks

Digital banks typically automate and integrate front-end experience with back-end infrastructure. Since they have minimal operating costs and are more agile in responding to market demand, digital banks not only foster greater competition and innovation for the finance sector, but also offer many advantages to consumers, like higher savings interest rates and ease of opening bank accounts.

Digital banking however, necessitates that both businesses and consumers be more vigilant with online security. While there are many security tools like encryption technology and identity management that combat cyber-crime, successful digital banking will require all parties involved to be better educated on cybersecurity.

Toby Koh Group MD Ademco Security Group

The inevitable is upon us. Digital banking is the future and I applaud MAS for taking the decision to embrace it, albeit cautiously and in small steps.

The banking industry will continue to transform - digital banking will reach out fast and with its much lower cost, be able to provide more cost-effective services and charge lower interest rates. I believe this will also serve to disrupt the e-payments scene not only in Singapore but regionally in the near future. Digital banks will end up offering much more than financial products and services and will use AI to understand our habits and wants to offer lifestyle products plus others.

In future, the young savvy mobile users may never ever step into a physical bank branch to open a banking account in future. Facial recognition and other biometrics will be the tokens of the future. ATMs and bank branches will decline in numbers as utilisation rates fall. And when one needs to speak to a bank representative, the staff will travel to the client or simply conduct it over video conference. The banking evolution is underway, and opportunities abound.

David Leong Managing Director PeopleWorldwide Consulting Pte Ltd

E-commerce transactions across the globe, particularly in China, are common. No hard currencies exchange hands but orders are taken and delivered. Why queue in physical banks? Digital banks will change the banking industry, and revolutionise the way money moves virtually and be captured along the chain of transfers through blockchains. Trails and footprints of money movement can be digitally captured and this is a first big step for anti-money laundering.

When money and funds are digitally organised, it will mean that channeling the flow of money from people to people, businesses to businesses and between countries, can be cracked with clever codes and algorithms. Breaking a bank will no longer be by hooded robbers. It will be hacked and cracked by sophisticated coders.

The risks? Nothing is safe and secured from hackers. Cybersecurity will be the the new weapons against money loss and robberies.

Hari V Krishnan CEO PropertyGuru Group

The entry of digital banks is a positive development as it offers consumers more transparency and choice. The increase in competition will spur innovation, which will lead to enhancing the banking experience for all. As Singapore moves to build up an ecosystem that would support the digitisation of entire sectors - including the property industry - traditionally offline and paper-heavy processes will be digitised, resulting in greater efficiency and less paperwork.

New players should exercise some caution initially, and take time to nurture consumer trust. Having led the property sector's digitisation journey, PropertyGuru has seen first-hand the significant increase in trust that technology can engender.

Leonard Cheong Managing Director AdNovum Singapore Pte Ltd

As the world becomes more and more digitalised, digital banking will surpass traditional banking as the most preferred form of banking in the future, including in Singapore. In the competition for gaining and retaining consumers, more value-added and innovative banking services will be made available which is beneficial to the consumers.

Security has to be enhanced regularly with advanced tools for the detection and prevention of cyber atacks and fraud, as new risks will surfacing as a result of technology advancement. The user friendliness of the digital services, privacy of consumer data as well as the perceived risk and trust concerns by consumers need to be addressed with care, as this might not only affect the adoption rate but affect the entire digital banking initiative.

Kunalan Chakravarthy Chief Executive Priority Consultants

Singapore's very own DBS is lauded around the world as a pioneering digital bank. With a growing digital population and the push to e-commerce, the move into digital banking is inevitable and a much needed development.

To realise Singapore's Smart Nation vision, it is imperative that the digital world mirrors the physical world. Retail shoppers are already validating coupons and paying for goods using smart watches and mobile devices.

If the banking infrastructure is not yet agile and robust enough to serve the next generation of financial services consumers, Singapore stands to lose out in the global race as a financial hub.

The barometer of trust in Singapore's banking structure and policies must always remain high. Digital banks bring about a new set of challenges from cyber threats to fraud and money laundering.

A well-managed and articulated governance model to address data privacy, governance and cyber threats needs skilled industry regulators and operators to make this a reality. A robust and effectively managed system builds trust, confidence and growth.

Henry Tan Group CEO Nexia TS Group

It's a brave move by Singapore in the direction of digital banking. Businesses businesses are going digital and I believe banking should also be moving in this direction given its function to facilitate trade and business. In fact existing traditional brick and mortar banks have been transforming themselves to have more digital functions. It is the future and having new digital banks that are not weighed down by legacy systems and investments will help the industry to move forward faster. The dangers that we need to watch are cybersecurity and money laundering.