Compliance in Asian Wealth Management Forum 2020 - Exclusive Insights - Andrew Chow - 2

Andrew Chow of 

Jan 24, 2020

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1. What are the challenges relating to electronic platforms or digital banks?

Video transcript

1. What are the challenges relating to electronic platforms or digital banks?

The MAS has actually announced that there are five digital banking licenses available. Two full bank licenses and three wholesale banking licenses. Now this is fundamentally different from what Hong Kong is doing in the context of the virtual banking license where anybody can apply for a virtual bank license. Now the key issue dealing with a virtual bank license in Singapore is that you need to actually understand how banking works. Now if somebody comes without actually having a unique selling proposition and they aren't able to penetrate the market, they can actually get this intermediated by the local banks, who already have a banking license, who have digital capability, and they already have that base of clients. The thing about the USP for a new digital bank is that it must be able to one - establish adequate capital, because the digital bank in four years would have to comply with Basel III capital requirements. So therefore, if you can't, then that's a fundamental problem for a digital bank. Now, the thing is that if you actually look at payments platforms who want to come in into the banking space, that creates an issue for them as well because when you talk about platforms, you talk about ease of onboarding, you talk about low cost; that in itself cannot help you in a digital banking license to the extent that you don't have your deposit taking, you don't have your lending, you don't have credit, you don't have market risk. So, it is a huge challenge for a non-bank to come in to get a digital bank license.



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