Standard Chartered to set up digital only bank in Singapore in a JV
Standard Chartered, one of the largest banks in the world, has announced a joint venture with the National Trade Union Congress (NTUC) in Singapore to begin a digital-only bank in the country.
The bank would likely launch a special vehicle for this business and it is reported that it would take 60% of the new company for a value of S$144 million while the NTUC would hold a 40% stake in the new company that is worth S$96 million. This is another added sign of the growing clout of the digital business in the banking world. Digitalization is taking over financial services and many banks are scrambling to launch digital banks to cut down on costs and also to serve their customers in a much easier and reliable manner.
Standard Chartered had recently launched its digital-only bank, called Mox, and the bank says that it has been able to sign up 3.5% of the population as customers for the bank. It has also launched many digital-only banks in the African region as such banks help to reach out to remote regions due to the proliferation of the internet and mobile phones. Banks find it difficult to serve customers in remote areas as setting up bank branches in such areas is costly and does not make business sense. In such cases, it is much easier to reach out to such customers through digital banking and thus serve the underserved.
Standard Chartered has long had very good relations with Singapore and its government with thousands of its employees working from that country alone. The Singapore government also holds a stake in the bank through its sponsored fund company Temasek Holdings. So, it is no surprise that the bank has chosen to launch its digital banking in this country and it is also expected to branch off to other countries in this region as digital banks begin to overtake traditional banks in new business in this region.
In this business in Singapore, the new company would be competing against Standard Chartered bank itself as both of them would be looking at the same user base for growing their business through the new generation of users are likely to prefer the new digital bank than the older legacy bank. The new company would also need to obtain a separate license to begin its business and this is expected to happen in the coming months.