Will digital banking licences increase credit access here?

SINGAPORE is expected to issue up to five digital banking licences by the end of the year. One of the requirements that the Monetary Authority of Singapore (MAS) will be evaluating the digital banking licence applicants on, is the incorporation of "innovative use of technology to serve customer needs and reach under-served segments of the Singapore market".

Observations from the development of digital financial service offerings in other countries suggest the widespread adoption of technology and an innovative business model can enable these new digital banks to serve the financial needs of the underbanked in Singapore. Competition from the digital banks is also expected to put pressure on existing financial institutions to further innovate to enhance product offerings and service quality.

A recent study jointly conducted by Google, Temasek and Bain & Co titled Fulfilling its Promise - The future of Southeast Asia's digital financial services suggests that while Singapore came out tops within South-east Asia in terms of the percentage of population well served with regard to financial services, the study showed a still-high proportion of the population deemed to be underbanked (38 per cent), and a smaller number classified as unbanked (2 per cent). The report defined underbanked consumers as having "no access to credit cards, underinsured, no long-term savings products".