Singapore’s Digital Banks Advocate Deposit Cap Removal to Foster Growth and Competition

Singapore’s digital banks, backed by Grab Holdings and Sea Ltd., are pressing the Monetary Authority of Singapore to remove the deposit cap hindering their growth and lending abilities. With profitability targets to meet, these banks seek to scale and compete with traditional banks while assuring consumer protection and long-term viability.

14 July 2023 – Singapore’s digital banks, backed by industry giants Grab Holdings Ltd. and Sea Ltd., are urging the Monetary Authority of Singapore (MAS) to eliminate the deposit cap that they believe is hindering their expansion. As these banks approach the S$50 million deposit limit, they argue that the restriction curtails their lending capabilities and impedes their ability to scale and compete with traditional banks.

The deposit cap, implemented during the initial two years of operation, aims to protect consumer interests, but digital banks perceive it as a barrier to their lending capacity. With time running out to demonstrate profitability within five years, these non-financial firm-owned digibanks are keen to increase scale and penetrate the market further. While Trust Bank, supported by Standard Chartered, thrives without such restrictions, Grab’s GXS Bank and Sea’s MariBank are eagerly awaiting updates from MAS on their request for the removal of the deposit cap.

Grab’s GXS Bank, supported by Singapore Telecommunications Ltd., has seen its savings account reach the regulatory cap within a few months of launch, and the waitlist for new accounts continues to grow. The bank has been actively engaging with the regulator to showcase its progress in improving infrastructure and ensuring a seamless scaling process. Similarly, MariBank, owned by Sea Ltd., is collaborating closely with MAS to establish robust frameworks that cater to user needs and long-term development.

MAS maintains that the deposit cap, along with other safeguards, is in place to mitigate risks associated with untested business models and to protect retail depositors and the financial system in the event of operational incidents or failures. – source: Bloomberg

Author: Terry KS

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