MAS relaxes rules around banks' involvement with digital consumer platforms

The Monetary Authority of Singapore (MAS) has unveiled plans to streamline regulatory requirements for banks looking to conduct or invest in non-financial businesses. This extends to digital consumer platforms such as e-commerce sites and online marketplaces.

Next, MAS will allow banks to be involved in the operation of digital platforms which match buyers and sellers of consumer goods and services, including the online sales of such goods and services. This will be permitted if such activities are related or complementary to the bank’s core financial business. The move hopes to give banks more flexibility to serve customer needs, while ensuring focus on their core financial businesses. MAS says that in doing so, two major adjustments to the “Anti-commingling framework” will be made.

However, these businesses have to be related or complementary to a bank’s core financial business, said Minister of Finance Heng Swee Keat during an annual dinner for The Association of Banks Singapore (ABS).

Reacting to the move in a conversation with Marketing, Pranav Seth, head of e-business, business transformation and Fintech and Innovation Group, OCBC Bank, agreed with MAS’ decision. He explained that OCBC believes that the future of banking is one where banking is ubiquitously embedded into day-to-day life and hence day-to-day financial decisions.

This will give the bank the ability to engage customers on commerce platforms and fulfill their banking needs almost invisibly.

Examples of how banks can better engage with customers on these platforms include providing loan services for a new products while users are browsing and comparing different models. “This would definitely improve customers' experience and can potentially create significant opportunities for the bank,” Seth added.

Sharing the same sentiment, Jeremy Soo, Singapore head of consumer banking group, DBS Bank, added that the policy change will allow the bank to play a more effective role in connecting “buyers” with “sellers” and vice versa online.

“The opportunity to create an online marketplace which leverages the bank's digital capabilities, partnerships and wide customer base is an exciting prospect we’re eager to explore,” Soo said.

Soo added that the policy change will allow banks to provide seamless digital experiences, where they are able to effectively integrate their customers’ banking journeys with online retailing and sales experiences.  At present, DBS is already involved in projects that are sales-related, such as DBS FasTrack, which was jointly developed by DBS and Applied Mesh.

“We look forward to participating in the consultation process so we can better understand how we can evolve the bank's digital offerings and improve customers’ experience,” Soo said.

Banks will not need to seek prior regulatory approval before conducting or acquiring major equity stakes in non-financial businesses which are permissible. However, to ensure banks continue to focus on their core businesses and reduce exposure, MAS will cap the investment at 10% of the bank’s capital funds.

“This recognises that online purchases of goods and services and the use of e-payment services are becoming increasingly integrated. MAS’ proposed refinement will allow banks to broaden their ability to provide a fuller suite of services to their retail customers,” Heng said.

Beyond digital platforms however, banks need to seek case-by-case approval as they are not allowed to engage in the sale of consumer goods or services as a business in its own right. Meanwhile, banks will continue to be banned from entering businesses such as property development and hotels and resorts facilities.

(Photo courtesy: 123RF)