In Korea, Kakao Bank has in its first year of operations attracted more than 6 million users. 4/6  BIS central bankers' speeches  29. The success of our banking liberalisation to date gives us the confidence to manage the entry of digital banks in our next phase of liberalisation. In time, successful digital banks in Singapore can also complement the local banks in anchoring domestic financial stability. New Digital Bank Licences To Facilitate New Business Models Eligibility conditions MAS will therefore issue up to five new bank licences to digital players that can add value to the Singapore banking sector and the economy. This is in addition to any digital banks that the local banking groups may also establish. The local banks are already allowed to set up standalone digital banks under our internet-only bank framework. 30. 31. We welcome firms with innovative value propositions to apply for the new digital bank licences, even if they have not yet established a track record in banking. They may apply for a digital full bank licence or a digital wholesale bank licence, as follows. MAS will issue up to two digital full bank licences, to companies headquartered in Singapore and controlled by Singaporeans. Foreign companies are eligible for these full bank licences if they form a joint venture with a local company, and the joint venture meets our headquarter and control requirements. 32. 33. We are starting with two digital full bank licences, so as not to fragment Singapore’s small domestic retail banking market.

They have partnered with FinTechs to harness the capabilities of new technologies and deliver more customised solutions. For example, UOB has partnered with Personetics to use artificial intelligence to identify individual transaction demands and enable UOB to provide customers with real-time and personalised guidance on their financial decisions. Second, they have built digital banks in overseas markets, leveraging a lower-cost operating model to quickly acquire new customers. For example, DBS launched digibank in India and managed to acquire over 2.5 million customers in its initial two years of operations. The bank has also recently replicated its digibank strategy in Indonesia. DBS was ranked by Euromoney as the world’s best digital bank last year. Third, they have adopted more customer-centric approaches, integrating solutions for their financial and non-financial needs. For example, OCBC has built a niche marketplace to provide curated products and services for mothers and their babies. The bank also launched the OCBC Silver Years programme to provide seniors a one-stop solution for financial advice, insurance products and lifestyle options. 28. Digital challengers with innovative business models can add diversity and choice to banking systems. They can often serve the needs of traditionally underserved segments, such as the credit gap faced by young and micro-enterprises. They could also bring with them deep digital know-how and insights from operating non-bank businesses. In China, for example, MYBank, has broadened financial inclusion, with 80% of its clients being first time borrowers like mom-and-pop shops. 99% of its customers repay on time.