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FinTechs belonging to this area offer traditional banking services in a modern way, usually through online services or mobile applications as well as ancillary services – e.g. enabling customers to manage their giro- or custody-accounts online and in real time or offering e-wallet services. Keywords in this context are also API-Banking or Banking as a Service (BaaS)/ Bank as a Platform (BaaP).
API-Banking:
API stands for application programming interface and is offered to access data banks and to extract and insert information. API-Banking consequently means the access to data banks of banks to offer new and innovative banking applications.
Through these services FinTechs offer services with new functions, e.g. enabling customers to manage their accounts online and in real time.
BaaS – Bank as a Service/BaaP – Bank as a Platform:
The API-based Bank as a Service platform has a full banking licence, but merely serves as the back end for standalone independent FinTechs, which “use” the licence and the back end of the bank to offer new financial services, launch additional financial products or expand into additional markets.
Introduction
Attitude of the country towards online-banking services
Online-banking service are significantly adopted in Singapore and the government has proactively developed the infrastructure to facilitate its use. These services are used regularly by Singapore residents as it is integrated efficiently with payment solutions online and at physical retail shops in Singapore.
Legal affairs
Obligations and requirements to provide online-banking services described above
Banking services are licensed and regulated by the Monetary Authority of Singapore (MAS) under the Banking Act 1970. Entities providing such services will be licensed and authorized as either a local bank, qualifying full bank, full bank, wholesale bank or merchant bank in Singapore, and it is permitted within the scope of their licensed activities to expand their services with the use of the internet.
The MAS has taken a more stringent approach for digital-only banks. In 2020, the MAS announced that it had granted licenses to two digital banks to operate as digital full banks and to two digital banks to operate as digital wholesale banks. Under these licences, the four banks are permitted to operate their business within the same scope and are subject to the same regulatory requirements as a licensed full bank or wholesale bank under the existing framework applicable to full banks or wholesale banks. The MAS is currently not granting new digital bank licences until further notice.
Additional comments regarding the legal situation for online-banking services or what FinTech’s must be aware of in this business area
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Economic conditions
Market size for online-banking services and biggest companies in this business area
Traditional banks such as DBS and United Overseas Bank that provide online-banking services to compliment their traditional banking services are overwhelmingly dominant in the market, and digital-only banks are yet to capture a comparable market share.