The Oversea-Chinese Banking Corporation, Limited (OCBC) Bank, a multinational banking and financial services corporation, has reportedly become the first company to introduce Google Pay’s peer to peer (P2P) money transfer service in Singapore.

The new digital payments option makes Singapore only the third country, following India and the United States, where the Google Pay P2P service is being offered.

OCBC has added Google Pay to PayNow, the Singapore-based P2P payments portal supported by the city-state’s financial institutions.

Customers now have the option of installing the Google Pay app onto their smartphones. It works for both Android and iOS operating systems. The app may be used to conduct instant transactions via PayNow.

Customers can transfer funds from their current or savings accounts. They can send money to anyone in their contacts list, who has linked their bank accounts to their mobile phone numbers.

Ching Wei Hong, head of global wealth management and consumer banking at OCBC, stated:

“Singaporeans continue to significantly increase their use of PayNow, with more than 70 million transactions worth S$12.16 billion in 2019. We believe that our partnership with Google Pay will continue to help drive this trend in 2020 and beyond.”

Caesar Sengupta, vice president of payments and the Next Billion Users initiatives at Google, noted:

“It was a pleasure working with the team to design and build Google Pay for Singapore so customers can provision their OCBC Bank accounts and leverage the national rails – via PayNow – for transactions.”

In December 2019, companies based in Singapore were allowed to instantly open a business banking account with the OCBC Bank.

Local startups can now open an OCBC account right after incorporation, instead of waiting one business day. Accounts can be opened almost instantly now because of a new API interface between OCBC Bank and Experian, a global information services company.

After a company is incorporated, OCBC Bank can use Experian’s platform to verify the firm’s business profile, which is issued and monitored by the Accounting and Corporate Regulatory Authority (Acra).

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The Monetary Authority of Singapore said it has extended the assessment period for approving digital bank licences in the city-state, citing the global escalation of the COVID-19 pandemic. 

Successful applicants will be informed in the second half of 2020 instead of June 2020, as originally intended, the central bank said on Thursday. (Reporting by Aradhana Aravindan in Singapore; Editing by Himani Sarkar)

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Nearly 65% of Singapore residents say they would consider working with an all-digital bank, according to the recently published Visa Consumer Payment Attitudes Study.

The study reveals that 84% of Singapore-based respondents said that they’d be willing to use virtual banking services offered by an existing financial institution. Approximately 75% of survey respondents noted that they’d consider banking with firms operating within the financial sector and other reputable companies that are not financial services providers.

Three in five, or around 63%, of those who took part in the survey, said they’d be open to banking with new startups.

Around 60% of respondents who were willing to open digital banking accounts offered by non-banks said they would consider switching some services from their existing bank to new digital banking providers, which may not have any experience offering such services.

About 20% of Singaporean respondents noted that they’d move all their services to a digital bank without hesitation or having any doubts.

Neobanks have been trying to attract customers by offering special incentives during the sign-up process. They’ve also been focusing on developing innovative products and services. Additionally, they aim to offer access to better rewards when people decide to use digital banking services offered by a non-bank.

Respondents said they were most interested in improved money transfer services, better and more convenient ways to pay bills, and faster and cheaper ways to make payments at retail outlets.

Kunal Chatterjee, Visa country manager for Singapore and Brunei, stated:

“The digital banking space in Singapore and Southeast Asia is set for a year of unprecedented growth, setting the stage for the next revolution in banking. When the region shifts to a millennial, digital-led demographic, more consumers will expect digital-first experiences, and want their banking and payments to match the speed and convenience of their user journeys.” 

Chatterjee added:

“At Visa, we are a network of networks to facilitate seamless money transfers, and our role is to connect and work with banks and fintechs to deliver the best-in-class payment experiences to make consumers’ lives simpler and more seamless.”

Singaporean respondents say they prefer neobanks because of the convenience they offer, which usually includes faster service as customers are not required to wait in long lines.

Information that Singaporean customers may be willing to share when opening a digital banking account include their banking history (67%), personal contact information (64%) and social media profiles (63%).

Survey respondents said they trust banks more than government agencies and other payment providers when it comes to handling their personal details.

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In June, Singapore’s regulator will hand licences to three new wholesale digital banks in a bid to better serve under-banked SMEs. Euromoney talks to Arival Bank, a fintech firm aiming to snag a licence and use it to fuel its global ambitions.

And so to the next stage of digital financial disruption. Last summer, the Monetary Authority of Singapore (MAS) said it would accept bids for five new virtual banking licences, with the winners to be announced around June 2020.

The MAS says it received 21 tenders and that the bids break down into two types. At least five bids have been lodged for full-service digital banks, to be whittled down to two by mid-year. Licensees have to stump up S$1.5 billion ($1.08 billion) in paid-up capital, must be based in Singapore and ultimately controlled by a local business interest.

Then there are the licences for new digital wholesale banks, coveted by at least nine companies and consortia. This is new and a further sign that disruption is moving beyond retail to the nuts and bolts of wholesale banking. 

The applicants include some of the biggest names in fintech and in technology in general. Among those bidding for a wholesale licence are Chinese firms Ant Financial and TikTok, and Singaporean internet operators Sea and Razer. Several are consortia, bringing together Hong Kong financial group AMTD with Chinese smartphone maker Xiaomi, and telecoms operator Singtel with delivery firm Grab.

Some are firms few will know outside the world of fintech. Take Arival, founded in 2017 in Singapore with a stated mission to “bring a new level of banking service” to small and medium-sized enterprises. 

Our initial customer focus is tech startups. That is the world where we most resonate. Within two years, we will be a leading financial provider for these firms, their go-to digital bank   

Jeremy Berger, Arival

When Euromoney meets its co-founder and COO Jeremy Berger, he is in Miami overseeing a Puerto Rico-based team in the final throes of applying for a US digital bank licence. 

Berger spends a lot of time in the air. Arival is also applying for a full digital banking licence in Lithuania, where Berger’s team is about to open an office in the capital Vilnius. 

Other markets on the firm’s radar are Malaysia, the UK, Australia and the UAE, with Hong Kong and Taiwan also on its wish list. But it is Singapore that interests the young firm most. 

Berger met his business partners, chief executive Vladislav Solodkiy and president Igor Pesin, both Russian nationals, at Money 20/20, an annual conference in Las Vegas about the future of payments and fintech. 

Solodkiy, who cut his teeth in media and marketing at two of Russia’s largest lenders, Russian Standard Bank and Alfa Bank, before jumping into fintech, launched Arival in October 2017. Pesin and Berger joined a few months later. 

Solodkiy’s CV is surely a sign of things to come as banking becomes more seamless and online. The leading providers of the future, Berger reckons, will be a melting pot of “industry experts, designers, artists, marketing gurus and young entrepreneurs”. 

He says that as a rule, virtual lenders “prefer to hire young, hungry and driven individuals with a clear mind and the willingness to learn, adapt and innovate” rather than employing “old bankers”.

‘Startup paradise’

Singapore was the obvious place to locate Arival’s global operations, Berger says, pointing to its global outlook and willingness to welcome outsiders. 

“It’s a startup paradise, with a lot of foreign-run fintechs, a supportive ecosystem and real fintech talent,” he says. “It’s full of ambitious digital firms looking for innovative digital financial services.” 

The firm spent its early days helping corporates and mainstream lenders tackle compliance issues, including money laundering, and little else. But given its history – Arival sprung out of a $40 million venture capital firm called Life.Sreda, whose early fintech deals include a profitable investment in Russian neo-lender Rocketbank – its ambitions were always set on becoming a transnational digital bank.

Then came last year’s announcement by the MAS. 

Singapore at the state level is a cautious operator, focused on pursuing accretive gains while keeping an eye on the bigger, long-term picture. The new wholesale licences fit into this framework. It involves risk, but it is contained. 

Innovation is the aim, but it is kept caged until it is fully trusted. Successful applicants will be allowed to serve SMEs and other non-retail segments, and can only take fixed deposits of over S$250,000 from individuals. 

Each licensee must have to hand minimum paid-up capital of S$100 million and will be restricted at first to just one physical place of business. After the winners are announced, there will be a period of bedding-in, before operations start in earnest from mid 2021. If the regulator likes what it sees, the new banks will be allowed progressively to expand their capital base, up to a limit of S$1.5 billion, and their service offering. 

Berger wants Arival to be “a real borderless fintech bank for rejected businesses and entrepreneurs”, eventually with operations around the world. 

While the application process in Singapore is still at a “very nascent” stage, he is “confident that we will be one of the finalists”.

Should it win, the firm will target its product offering at fintechs and the wider digital community, including bloggers, streamers and influencers, but also charities and freelancers. 

“Our initial customer focus is tech startups,” Berger says. “That is the world where we most resonate.” 

Higher-risk customers are the reason why we go to bed thinking about compliance and wake up to the very same thought   

Jeremy Berger

Based on an internal digital analysis of 2,000 customers, Arival identified 12 products to integrate into its platform, including business bank accounts (delivered via its own banking platform, ArivalOS), international payment transfers, foreign exchange, business expense and debit cards, factoring, and financial management services, including analytics and accounting. 

“Within two years, we will be a leading financial provider for these firms, their go-to digital bank,” Berger says. 

He is keen to stress that Arival will be “the first fintech bank for SMEs. We’re not a neobank or challenger bank.” 

He says neobanks that align with traditional lenders are too restricted in their ability to serve the under-banked, while challenger banks such as N26 and Revolut are often seen as back-up banks rather than primary providers. 

Arival’s “full range of products and services” and open infrastructure will, he hopes, result in customers ditching their traditional provider and hopping on board.

He is careful not to rock the boat too much, however, balancing the firm’s ambitions with a nod to Singapore’s need to create growth and guarantee social cohesion. That means focusing on job creation and on innovation, but not at the expense of allowing margins and good ideas to be crushed by over-competition. 

To that end, he says: “I don’t think we will disrupt the local market. It’s dominated by three or four banks and that’s not going to change anytime soon. But more fintechs will spring up here or come to Singapore, and that development coexists nicely with our wider strategy.”

Insiders reckon the bidding battle for a full digital licence will come down to which firms are better known and more reputable, implicitly trusted by government and bolted firmly to the economy. 

That should put the Singtel-Grab consortium in prime position. Many see it as a shoo-in for one of the full licences, although Eugene Tarzimanov, Asia senior credit officer at Moody’s financial institutions group, points to the threat of a telecommunications firm “entering the retail banking space and actively cross-selling banking products to its already vast client base, by adding perks such as free Wi-Fi. If they get the right partner who knows how to do banking and credit, they will certainly pose a competitive threat.”

On the wholesale side, the ball is still up in the air. 

Dennis Khoo, TMRW Digital Dennis Khoo, regional head at TMRW Digital Group, Singapore lender UOB’s first fully digital bank, says: “The questions the regulator will ask are: ‘First, what are you bringing to the table that your rivals aren’t; and second, are you raising productivity?’ That’s a key question given Singapore’s incremental gains-based growth model.” 

In terms of paid-up capital, the MAS has set the bar at a reasonable height for applicants. It’s a decent chunk of money. But as Khoo notes sagely: “Banking isn’t necessarily something you can ‘try’.” 

He believes the big opportunity for new digital wholesale banks will be in disbursing credit to underserved or unbanked SMEs. But he adds that a new entrant “must have a different way to underwrite. New digital wholesale players will likely focus on the credit business and then expand into FX and remittances. 

“Data will be key in the credit business. If you can find better, quicker and more seamless ways to underwrite, you’re always going to have an advantage. And there, good data and interpreting that data will be important.” 

USP

Arival clearly marked out several of those questions in advance. Berger says the firm will “seek to bundle fintechs together. The regulator wants to encourage more fintechs to work together on one banking platform. That’s where we come in.” 

Where the firm can offer a unique selling proposition in the eyes of the regulator is its expertise in compliance and background checks. This is no small thing.  Arival’s A.ID platform is described by Berger as “cutting-edge compliance”, a “differentiator” that performs know-your-customer checks, tackles money laundering and meets compliance needs. 

Most banks, he says, view compliance as “an obligation, a headache and an expense. It isn’t their passion or key feature, or a channel to generating money for their founders and shareholders. Compliance is our ‘secret sauce’.”

You can call that good marketing or good anticipation, a sign of a company working to its strengths. Arival was aware from the start that the regulator’s chief concerns would revolve around compliance. 

“We wanted to be able to answer questions around how we check our clients and on-board them, and why our bank won’t be used for money laundering or other criminal activities,” says Berger. 

Compliance, he says, is “really what keeps the regulators’ blood flowing. Higher-risk customers are the reason why we go to bed thinking about compliance and wake up to the very same thought”. 

The regulator will be heartened by those words. If there is a concern over the new digital wholesale banking applicants, beyond an ability to stay the course, it is the threat presented by the darker side of the digital world. 

Hackers working for bad actors like to prod and poke at new digital platforms, locate any soft spots and use them to launder and pilfer for profit. 

Disruption in retail banking is established, a fact and a way of life. There is no turning back the clock. This summer in Singapore, a new chapter in this story will start, as three new financial providers are handed the right to offer digital wholesale products to underserved corporates in the Lion City. 

After that, it’s up to the disruptors to prove they are worthy of the customer’s and the regulator’s trust. 

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While digital banks are set to be established in Singapore, a report by PricewaterhouseCoopers found that 67% of the Singaporeans they surveyed would still choose to use their existing bank accounts as their primary account.

The PwC report revealed that out of 1,500 Singaporeans, 40% said that they would only consider opening a bank account with a digital bank once it is already popular and successful. Only 30% would make it their primary bank.

Among the barriers for customers in the city-state were data security and financial stability. Although 55% of respondents were willing to share their personal data with digital banks – a figure that’s already lower compared to their peers in Malaysia – 34% indicated that they did not trust their personal data in the hands of such entities.

In addition, human touchpoints were still crucial for customers in complex situations, such as transactions related to emergencies (64%), wealth management (63%), mortgage (58%), and insurance (56%).

However, the PwC report also showed that many customers do face frustrations with their existing banks, including long queue times (42%), long wait times on hotlines (23%), and the inability to perform banking functions online (13%).

For the 70% of interviewees who had three or more pain points with their existing banks, digital banks’ financial features were attractive. Top features included better rates on deposit and lending (49%), quick and easy online customer service (42%), and a better mobile or digital experience (40%).

Apart from financial features, 66% of Singaporeans were “interested” or “very interested” in having their digital bank offer non-financial features in categories like ecommerce, travel concierge, financial education, and personal life coaching services.

“It is critical for digital banks to have a strong proposition that goes beyond offering traditional financial services but also engages with their customers on a more holistic level,” said Sam Kok Weng, Singapore financial services leader at PwC. “This will be particularly important as customers are increasingly calling for integrated platforms that offer a full suite of lifestyle services.”

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Singapore-based Arival Bank, a fintech bank for small and medium-sized enterprises and crypto businesses, has applied for a digital wholesale banking license in the city-state.

Arival was founded in 2017 as an internal venture spun out VC firm Life.Sreda. The company is led by CEO Vladislav Solodkiy, chief financial officer Igor Pesin, and chief operating officer Jeremy Berger, who are all part of the VC firm’s leadership team.

With its bid, Arival plans to focus on serving what it calls “abnormal” clients or higher-risk customers, who usually get turned down by more traditional banks, according to a Business Times report.

“The focus on ‘abnormal’ or underbanked SMEs gives us the opportunity to not compete with other digital or traditional banks, avoid spending money on advertising or customer acquisition, and allows us to focus on margins,” Berger told the Business Times.

The digital bank hopeful also said it plans to aggregate fintech products from third-party service providers and make them available on a single platform powered by open application programming interfaces. In addition, it looks to offer a banking-as-a-service platform that would help other fintech firms launch.

Berger noted that the company’s “compliance-as-a-service” product, which provides easily integrated compliance solutions, also serves as a key differentiating factor in favor of Arival.

According to its website, Arival is not a bank yet, but it has applied for a US-based international banking license that is on track to be granted this year. Berger told the Business Times that the US license, which is in the final stages of receiving preliminary approval, will be “complementary” to the Singapore license.

“It gives us a unique entry to the US banking market as well, and allows us to contribute to an ecosystem that is in need of a natural remedy for economic boost such as fintech,” he added.

In addition to the US and Singapore, Arival has also started the application process for a similar license in Europe and looks to receive it by the end of the year.

Arival joins a growing list of companies that have announced their Singapore digital banking bids: Grab and Singtel, Ant Financial, Sea, and an Enigma-led consortium, among others. Singapura Finance and digital payment startup MatchMove Pay have also reportedly teamed up to apply for a digital full bank license in the city-state.

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THE Monetary Authority of Singapore (MAS) will have a second go at its failed electronic know-your customer (e-KYC) project, said MAS managing director Ravi Menon on Wednesday.

The centralised KYC utility idea was first proposed in 2017, and was meant to allow financial institutions to identify and verify potential customers’ details in a seamless way.

The e-KYC utility would have created a more efficient way of checking against sanctions and blacklists.

It could have fundamentally changed the way banks labour through documents to block illicit funds out of money laundering or terrorism financing activities from being channelled through the banking system here.

But in 2018, MAS had announced it as a failure then. While the technology worked, it was far too expensive to implement, said Mr Menon.

“We are taking another crack at it,” he said at a press conference to launch the Bank for International Settlements’ (BIS) innovation hub in Singapore. This time, MAS will look at a “less costly” technology architecture.

Singapore’s plan to resurrect its failed e-KYC project comes as BIS has established one of its first innovation hubs outside of Switzerland in Singapore. One of the hub’s focus will be on public digital infrastructures.

The hub, launched at the sidelines of the Singapore FinTech Festival and Singapore Week of Innovation and TeCHnology (SFF x SWITCH) conference, will work on setting up a framework that is built on digital identity, consent and data sharing.

The second project is to create a digital platform for supervisory tech, or suptech, solutions. With this platform, central banks can try to solve regulatory problems by sourcing solutions from the fintech community.

The BIS hub’s setup comes as Singapore is eager to build new highways for the digital economy, amidst the headlines dominated by geopolitical risks, anti-globalisation and political polarisation, said Mr Menon.

“The financial system must be similarly modern and technologically savvy, and be able to support the digital economy. There’s a lot of work that needs to be done on this front.”

Against that backdrop, Mr Menon said there is a chance to see how the work on Singapore’s “KYC 2.0” can dovetail into work to be also done by BIS at its innovation hub here.

The e-KYC project requires a global effort, Mr Menon added, pointing out that at this time, regulators do not allow a straight transfer of accounts across borders – say between a bank in the UK, and a bank in Singapore – even though a customer has passed his or her KYC requirements in the original jurisdiction.

“This (e–KYC) is a concrete example where you need as much of a global approach as possible,” he said.

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It was widely reported last week that Revolut launched its travel card in Singapore, its first move in Asia. But there are few obstacles ahead.

Last week Sifted welcomed two guests to our first remote roundtable to discuss the fate of challenger banks. The panellists were Roxane Sanguinetti, a former Bank of America Merrill Lynch trader who now runs a capital markets fintech, and George Davies, a managing partner at European venture capital fund Hambro Perks.

The conversation centred on neobanks’ need for niches, the fragility of young brands and their survival prospects.

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The Monetary Authority of Singapore (MAS) has commenced accepting applications for digital bank licenses. The new licenses are for aspiring non-bank Fintechs. MAS seeks to ensure that Singapore’s banking sector continues to be resilient, competitive and vibrant. Applicants must have their paperwork in by December 31, 2019.

The news follows an earlier announcement by Senior Minister and Chairman of MAS, Tharman Shanmugaratnam, that MAS will issue up to two digital full bank licenses and three digital wholesale bank licenses.

According to MAS, digital full banks will be allowed to take deposits from and provide a wide range of financial services to retail and non-retail customer segments. Digital wholesale banks will be permitted to serve SMEs and other non-retail segments.

These new digital banks will be in addition to any digital banks that existing Singapore banking groups may already establish under MAS’ existing regulatory framework.

MAS states that applicants must meet the eligibility criteria for business track record, fit and proper shareholders, directors and management, capital commitment, a clear value proposition, and a sustainable business model, to be considered.

Additionally, applicants for the digital full bank license must be anchored in Singapore, controlled by Singaporeans and headquartered in Singapore.

Eligible applicants will then be assessed for the following:

• Value proposition of the applicant’s business model, incorporating the innovative use of technology to serve customer needs and reach under-served segments of the Singapore market that differentiates it from existing banks. MAS will also consider the ability of the applicant to implement the proposal.
• Ability to manage a prudent and sustainable digital banking business, including the level of understanding of key risks in a banking business, and strength of its regulatory compliance and risk management plans. MAS will also consider the reputation, track record, financial strength and commitment of the applicant’s shareholders.
• Growth prospects and other contributions to Singapore’s financial centre, such as the jobs it will be bringing to Singapore, its commitment to develop the skills of the local workforce, the capabilities (including technology) it will be locating in Singapore, the headquarter functions it will be anchoring here as well as its regional expansion plans.

Digital-only challenger banks are a hot sector of Fintech. The UK has seen multiple digital banks become Fintech unicorns. Most prognosticators expect traditional brick and mortar banks to decline while mobile-first operations gain market share.

Last year, Hong Kong moved quickly to facilitate new “virtual bank” licenses with eight applicants already approved.

In comparison, the US has struggled to facilitate digital-only bank licenses as regulatory requirements are convoluted and traditional banks have lobbied aggressively to slow down access to the banking sector as they fear the looming competition.

MAS expects to announce the successful applicants in mid-2020. Successful applicants will be expected to commence business by mid-2021.

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Aspire provides SMEs with a 60-day, interest free credit line of up to S$100,000 to solve their working capital needs

Singapore-headquartered Aspire, a neobank for small and medium businesses (SMEs) in Southeast Asia, announced today it has secured US$32.5 million in Series A round of financing.

The round was led by Singapore-based Mass-Mutual Ventures (MMV) Southeast Asia, with participation from Silicon Valley’s Arc Labs and existing investors Y Combinator, Hummingbird Ventures, and Picus Capital.

The fintech startup will use the capital to boost its financial product offering and strengthen local presence.

This round comes exactly a year after Aspire raised a seed round of US$9 million from investors, including Insignia Ventures Partners, Mark 2 Capital, and Hummingbird.

Founded in January 2018 Andrea Baronchelli (former EVP and CMO at Lazada), Aspire aims to “reinvent SME banking in Southeast Asia”. The startup is serving a new generation of internet businesses with a mobile-first digital account across Thailand, Indonesia, Singapore and Vietnam.

The startup’s flagship product AspireAccount, targeted at digital merchants across the region, can be opened online in just few clicks. It is free and comes with an instant credit limit for daily business expenses, a virtual B2B payment acceptance and other tools to help SMEs manage their cash flow.

Aspire claims it provides SMEs with a 60-day, interest free credit line of up to S$100,000 to solve their working capital needs. Its goal is to provide business owners with fast and simple access to the funding they need to grow.

A business credit card is next in line and it will be available and linked to each business account as early as this year.

Aspire graduated from Y Combinator Winter 2018 batch.

“We are extremely excited about the problem we are solving for this fast growing generation of digital entrepreneurs in Southeast Asia,” said Andrea Baronchelli, Founder and CEO. “We have seen 30 per cnet month on month growth since we founded the company in January 2018 and expect to open more than 100,000 business accounts by next year.”

MMV invests in seed to growth stage companies in North America, Europe, Israel and Southeast Asia. Its key areas of investment focus include fintech, insurtech, cybersecurity, data analytics, digital health and enterprise software.  Today, MMV manages US$250 million across two funds based in Boston and Singapore.

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