Firstly, the two digital full bank licences that are able to take retail deposits also need to adhere to strict criteria that may be hard to stomach for smaller players.
"That's going to create some barriers as to what you can do, as you are limited at first," added Mr Lord. With the considerable resources that the Big Three banks - DBS, OCBC and UOB - have at their disposal, digital full bank entrants with less financial firepower might find themselves hamstrung by the high capital requirement in addition to the additional investments they must pump in at the start to build the bank.
He acknowledged there might be some pockets of under-served segments such as micro-SMEs, but it is unclear if demand is enough to justify the existence of digital banks, especially in the case of retail customers. However, whether the needs of these under-served segments will be met by stand-alone digital banks or incumbent banks' digital banking solutions remains to be seen, said Mr Lord.
DBS, OCBC and UOB have long invested in technology and are already far ahead when it comes to technology advancements. The three local banks have also made significant inroads in Asean, with UOB and DBS having digital banks in the region.
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