Fintech and Digital banking services

With the Fintech industry coming into maturity, central banks across the world have set up policies, and restrictions to better regulate the industry. Do be aware that each jurisdiction has its own unique set of rules and restrictions that is only applicable to them. Thus In this blog post, we are just going to have a broad overview and understanding of the following Digital Banking services.

  1. Fintech/Digital/Virtual banking license
    1. digital full bank
    2. digital wholesale bank
  2. E-money license

Digital banking license

Digital banking licenses are issued to entities including non-bank players, to conduct digital banking businesses. This is done to liberalise the commercial banking sector and promote competition that will ultimately benefit the consumer. There is two digital banking license Full Bank and Wholesale. Licensees are allowed to take deposits from and provide banking services. The difference between Full Bank and Wholesale license is,

  1. Digital Full Bank License allows for a licensee to serve retail and non-retail customer segments.
  2. A digital wholesale License only allows the licensee to provide services to SMEs and other non-retail customer segments.

Digital banking license holders like traditional banks are regulated by MAS(in Singapore) and must follow Banking Act.

E-money license 

Different from a bank, an E-Money license only offers limited financial services like payment services, digital wallets, Domestic Money& Cross-border Transfers & Merchant Acquisition, E-Money Issuance of Digital Payment Tokens Dealing or Exchange, and Money Changing. In Singapore, E-money license holders must obey The Payment Services Act.

What an E-money license can’t do is manage client money, offer investment products, stand-alone lending services, and provide interest to clients that deposit money in their digital wallets.