Key comparisons for Digital bank license (Malaysia, Singapore & Hong Kong)

Malaysia Singapore Hong Kong

Exposure draft issuance in Dec Guidelines June 2019; submission Revised guidelines issued May
Key Dates: 2019, and finalized document Key Dates: of applicants by end-Dec 2019. Key Dates: 2018; first licenses granted since
expected by 1H20. March 2019.

Number of Number of 5 to be issued – 2 DFB and 3 Number of 8 issued.

licenses: 5 to be issued. licenses: DWB. licenses:

Asset size Asset size Asset size

RM2 bn (foundation phase). N/A N/A
limitation: limitation: limitation:
❖ No access to ATM Network or ❖ Not expected to maintain physical
Touch Points/ ❖ Access to shared ATM Network, Touch Points/ cash deposit machine network Touch Points/ branches;
Physical cash-out services by Paynet. Physical but allowed to offer cashback Physical ❖ Virtual bank applicant must have
Presence: Presence: service through POS terminals. Presence:
❖ Maintains 1 registered office. physical presence in Hong kong,
❖ 1 physical presence for DWB. and locally incorporated.
Products offered should explain Scope of Only simply capital market Scope of No specifics but virtual banks
Scope of
how it will address target segment Services: products for investment of Services: primarily target retail (including
Services:
needs. individuals (early stage). SME).
For DFB, includes restricted and full
Phasing In?: 3-5 yrs “Foundational Phase”. Phasing In?: DFB; restricted DFB is further Phasing In?: N/A
divided into entry stage and
progression stage.

Capital Same as domestic systematically Capital commensurate with nature

CET1 ratio of 8% (foundation Capital important banks (DSIB, given Capital
Adequacy: phase). Adequacy: untested model.) Adequacy: of operations and banking risks.

Minimum ❖ SGD15 mn with progressive Minimum

Minimum ❖ RM100 mn (foundational phase). increase to SGD1.5bn upon
Paid up Paid up Paid up ❖ HKD 300 mn
RM300 mn (by end of 5th year). capital: becoming full DFB. capital:
capital: ❖
❖ SGD100 mn for DWB.

Varun Mittal
1
 Key comparisons for Digital bank license (Malaysia, Singapore & Hong Kong)

Malaysia Singapore Hong Kong

Equivalent to licensed banks, save DFB and DWB are subject to same
Supervisory for capital/liquidity leeway during Supervisory regulatory requirement of full and Supervisory Similar to conventional banks
Environment: foundation phase. Environment: wholesale back respectively Environment:

Simplified liquidity requirement Minimum Liquid Asset or LCR HKMA highlights liquidity,
and may impose LCR/NSFR during requirement; abide by LCR if operational and reputation risk
Liquidity: Liquidity: internationally active/designated Liquidity: could be accentuated.
foundation phase.
as DSIB Appropriate controls to be set
up for 8 basic risk types
Retail & non-retail deposits for
DFB, with deposit cap (initially
Deposit Deposit SGD75,000 per individual and
No specifics. SGD50 mn in aggregate), Deposit
Taking: No specifics.
Taking: applicable during restricted Taking:
phase. SME and non-retail for
DWB, or retail fixed deposits
above SGD250,000
Some phased in corp. governance Should not impose minimum
Operating Operating for restricted DFB during restricted Operating balance requirement or low-
Conditions/ Asset size limit during foundation Conditions/ phase, proprietary trading Conditions/ balance fees on customers and
Restrictions: phase. Restrictions: prohibited, while unsecured lending Restrictions: must play an active role in
credit limit capped at 2x of promoting financial inclusion
individual’s monthly income.
Shareholder of virtual bank that DFBs limited to applicants
owns >50% may be required to anchored and headquartered in If virtual bank is not owned by
Shareholding organize financial and financial- Shareholding Singapore and controlled by Shareholding bank/FI, applicant to be held by
Conditions: related entities under a licensed Conditions: Singaporeans. DWB’s are open to Conditions: intermediate holding co in Hong
institution or financial holding foreign companies as long as they Kong, under regulator purview.
company. are locally incorporated.

Expected Expected Expected

start of After 1H20. start of Reportedly mid 2021 start of Reportedly early 2020
operations: operations: operations:

2 Varun Mittal