REQUIREMENT FOR DIGITAL FULL BANKS TO PROVIDE BASIC BANKING ACCOUNTS AND OTHER FINANCIAL SERVICES

A 2019 survey revealed that whilst only 2 % of Singaporean adults are unbanked, a sizeable 38% of Singaporean adults are underbanked. Given the push to digitalization, I asked the Prime Minister whether the digital banks which only recently issued with licenses by MAS may also roped in to provide basic banking accounts and services to these groups of Singaporeans so as to ensure their financial inclusion. I was heartened to read SM Tharman’s response in which he stated that digital banks are expected to allow for accounts for no minimum balance requirements or even where they fall below fees! Please see below my question and SM Tharman’s comprehensive response.

REQUIREMENT FOR DIGITAL FULL BANKS TO PROVIDE BASIC BANKING ACCOUNTS AND OTHER FINANCIAL SERVICES

Mr. Murali Pillai asked the Prime Minister whether MAS will require digital full banks to provide basic banking accounts and other financial services to unbanked and underbanked Singaporean adults so as to enhance their financial inclusion.

Mr. Tharman Shanmugaratnam (for the Prime Minister): All major retail banks have committed to deliver affordable basic banking services in line with the Code of Consumer Banking established by the Association of Banks in Singapore (ABS). The major incumbent retail banks have in fact been offering basic banking accounts since 2002. Typically, such accounts come with an ATM/debit card, internet banking and electronic payment services, and can be maintained at very low or even no cost. The digital full banks are expected to make similar commitments.

Nearly all adult Singapore residents have bank accounts. In last year’s Solidarity Payment payout, around 99% of Singaporeans who received the payments had the amounts credited into their bank accounts. Surveys found that many of the remaining individuals had bank accounts but opted to receive the payment by encashing cheques over the counter.

The introduction of new digital services such as MyInfo have further reduced barriers to obtaining financial services. Account opening can now be achieved without having to physically visit a bank branch or conduct face-to-face verification. Banks have also started to offer services such as micro-investment saving plans and personal financial management tools.

The digital banks will add diversity to our banking system. With greater scalability of digital channels and lower cost structures from leveraging technology, the digital full banks are expected to deliver lower-cost products, including accounts with no minimum account balance requirements or fall below fees. Innovative use of data and technology should also allow digital banks to reach under-served segments of the population.

Notwithstanding Singapore’s very high levels of banking access, MAS will continue to explore ways to ensure financial inclusion.

Member of Parliament for Bukit Batok SMC, Advisor to Bukit Batok SMC GROs.