Singapore is set to issue up to five digital bank licences as a part of its move to further open up its banking sector.

The Monetary Authority of Singapore (MAS) announced the decision following months of deliberations after multiple regulators in East Asia started issuing virtual bank licences.

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The latest move expands Singapore’s existing internet banking framework introduced in 2000. Also, it opens up the sector for non-banking players to apply for the digital licences.

Initially, MAS plans to issue up to two digital full bank licences and three digital wholesale bank licences. The full bank licensees will cater to the retail customers while wholesale bank licensees will serve SMEs and non-retail segments.

The regulatory authority aims to invite applications next month.

Companies headquartered in Singapore and controlled by locals are eligible to submit applications for digital full bank licences. Foreign firms can apply for the banking licences in a joint venture (JV) with a Singapore company.

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All companies can apply for digital wholesale bank licences.

MAS chairman Tharman Shanmugaratnam said: “The new digital bank licences mark the next chapter in Singapore’s banking liberalisation journey.

“They will ensure that Singapore’s banking sector continues to be resilient, competitive and vibrant.”

The entry of new firms is expected to diversify the Singapore banking sector largely dominated by a few players. It is also expected to reach out to the under-served segments of the market.

In May this year, Hong Kong granted four virtual banking licences.