Lecture series
Digital bank licences in ASEAN
What a digital bank is, why several Southeast Asian regulators created a licence for it, what they ask of applicants, how phased entry works, and what the model means for risk, profit and supervision. Five lessons, compared with East Asia, Europe and other regions.
5 of 5 lessons published. Lesson 1 is free to read.
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- 01What a digital bank is, and why regulators license it separatelyA digital bank is a bank: it takes deposits that are protected, and it serves customers mainly through electronic channels instead of branches. Most jurisdictions license it like any other bank; a few, including Singapore, Malaysia and the Philippines, created a dedicated licence.
- 02What regulators ask of applicants: owners, capital, technology and an exit planA digital bank applicant passes the same core tests as any bank. The differences lie in who may own it, how much capital it brings for the losses of its first years, how its technology and people are checked, and whether it has a plan to close in an orderly way.
- 03Phased entry: restricted licences, caps and the path to full statusMany regulators let a new bank start small. For an entry phase it operates under caps on deposits or assets and lighter requirements, and it moves to full status only after it has shown that its model works. If it cannot, it may have to exit.
- 04The digital bank business model: deposits, credit and the path to profitA digital bank earns money the way any bank does: it lends deposits at a higher rate than it pays for them. Without branches it is said to run at lower cost, but it pays for growth with higher deposit rates, technology and marketing, and it needs scale and a lending book to cover them.
- 05Risks, supervision and the questions to ask before enteringA digital bank carries the risks of any bank, and some of them weigh more: technology and cyber risk, deposits that can leave quickly, and a business model that may not reach profit. Supervisors apply the ordinary banking rules, watch the entry phase closely and expect a way out that does not harm depositors.
Quiz and certificate 8 questions; those on lesson 1 are free to try. Read every published lesson and score 80% or more for a certificate of completion.
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