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Digital banking puts your finances at your fingertips 24/7. There's a host of online banks, digital-only banks and personal finance apps available now, all designed to give you better, faster control of your cash. We've rounded up everything you need to know below.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Note: Due to the ever-changing digital banking landscape, the list provided in the table above is not exhaustive.
Digital banks (which include challenger banks or neobanks) have the capacity to offer the same type of bank services as traditional banks, without the heavy infrastructure and legacy systems that the latter operates on. They are highly adaptive and operates on cutting edge digital platforms with a focus on mobile banking.
With no physical branches, digital banks allow you to manage your finances entirely online, from an app or web-based platform on your electronic devices.
You can typically sign up for a digital banking account in minutes, get your card relatively quickly (a virtual card may even be generated for immediate use), benefit from convenient features such as overseas payments with zero foreign currency fees, spend analytics, budgeting tools and more.
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According to the Monetary Authority of Singapore (MAS), digital banks are expected to utilise technology to reach ‘under-served’ segments of the domestic market to differentiate them from existing banks.
MAS has also clarified that entities holding digital full banks license will:
Here are the definitions between the various banking models and their features:
Banking model | Definition | Full banking licence | Services and features |
---|---|---|---|
Traditional bank | A financial institution licensed to receive deposits and offer loans. Usually has headquarters and branches located across the countries in which it operates. | Yes |
|
Challenger bank | A fintech company natively built around retail banking and operates entirely online without the presence of physical branches. Typically offer a full suite of banking services similar to traditional banks. | Yes |
|
Neobank | A fintech-based bank that operates solely digitally through web platforms and mobile applications. Target niche market and has limited offerings compared to traditional banks. | No |
|
So the key difference between digital banks and traditional banks is that digital banks only operate online with no physical presence. This means that there’ll be no in-branch services and all banking activities will be conducted online.
In terms of the range of banking services, digital banks will not be bringing anything radically different to the table. So expect a similar (or a slightly smaller) set of products and services that you expect from existing banks, including savings accounts, fixed deposits, payments and loans.
Many banks offer contactless payments via digital wallets like Apple Pay, Google Pay and Samsung Pay. For instance, DBS allows its customers to connect their credit and debit cards to these digital wallets, but it’s still a traditional bank.
Similarly, if a bank offers a top-notch mobile banking app, Internet banking services and digital savings tools, this doesn’t automatically mean it’s a digital bank either. Remember, a 100% digital bank is one that doesn’t use any existing banking systems or infrastructure.
The digital banking model is not entirely new in Singapore as various lenders or digital payments startups have been allowed to operate with MAS’s remittance licence.
These are known as neobanks, which do not have a banking license but are in partnership with financial institutions to offer bank-licensed services. There is a number of neobanks available in Singapore, including:
Digital banks strive to offer a seamless one-stop experience through an ecosystem of partners and money management features within a single platform.
Among the many perks of using a digital bank are:
Some of these benefits have their downside too:
In June 2019, the Monetary Authority of Singapore (MAS) announced that it’ll grant up to five digital banking licences – two full banking licenses and three wholesale banking licenses – for non-banking entities to take deposits from retail customers. The application window closed at the end of 2019 with a total of 21 contenders.
The new digital banks are expected to commence operations from early 2022, so we can expect exciting new offerings in the coming years. However, the licensees for DFB and DWB are limited to the following:
Digital full bank (DFB)
This license allows the bank to serve retail and corporate customers and will create in three stages to becoming a full bank. For the first two years, DFBs will be subject to a number of restrictions imposed by MAS. Once the Restricted DFB has met all relevant milestones, it’ll progress to become a digital full-fledged bank with restrictions lifted.
Stage 1 – Restricted Digital Full Bank (Restricted DFB):
Stage 2 – Digital Full Bank (DFB):
Grab-Singtel consortium and SEA Group have been awarded this license.
Digital wholesale bank (DWB)
A DWB can only open and maintain deposit accounts for SMEs and corporates. These providers can also accept fixed deposits of at least $250,000 from individuals.
Banks awarded this licence:
Information provided above is accurate as of 7 December 2020.
Digital banks are subject to the same capital requirements and regulatory requirements as traditional banks today, including Anti-Money Laundering (AML) and Know Your Customer (KYC) processes.
Backed by advanced technology and infrastructure, the security features of digital banks will generally include the following:
You can sign up with a digital bank in Singapore by downloading your chosen bank’s app onto your smartphone.
To sign up, you’ll typically need to provide a few of your personal details, including your full name, date of birth, address and email address. This process typically requires you to take a front and back image of your government-issued ID, as well as a selfie for identity verification.
Once your application is successfully verified, you’ll need to deposit funds into your account to activate it and can begin using it.
Zyane Tan is an associate editor at Finder. An experienced copywriter and content creator, Zyane enjoys writing on a wide array of subjects. When she’s not busy typing away, she’s reading and musing over a pint.
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