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Digital Bank VS. Traditional Bank: Which is Better

4 min read|Last Updated: August 4, 2022|
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If you didn’t know by now, digital banks have been a hot topic in Singapore as it seeks to position itself as a smart nation. The awarding of new digital banks such as the Grab-Singtel consortium and tech-giant Sea by the Monetary Authority of Singapore (MAS) is the first step towards achieving this goal.

The next step for you after setting up your company in Singapore is the open a corporate bank account, and you have the option of going for traditional or digital banks. Just to note, MAS regulates all bank licenses and ensures that the Banking Act is properly followed by banks operating in Singapore.

What Are the Traditional Banks in Singapore

When it comes to traditional banks, there are 2 main types:

  • Local banks

    Under local banks, there are 4 local full banks who can provide all banking services in accordance to the Banking Act:

    • Bank of Singapore Limited
    • DBS Bank Ltd
    • Oversea-Chinese Banking Corporation Limited
    • United Overseas Bank Limited

    If you are a new start-up in Singapore and would like to have a corporate bank account within the country then any of these local banks will serve your banking needs. One of the advantages is their low transaction costs.

    These banks can also provide the following services, among others:

    • Business account
    • Invoice financing
    • FX rates
    • Credit line
    • Corporate card
  • Foreign banks

    Currently, there are an estimated of 119 foreign banks in Singapore, and are registered under the following licenses:

    • Full banks – offer the entire range of banking services approved under the Banking Act
    • Wholesale banks – engage in a similar range of banking activities, except for the Singapore Dollar retail banking activities
    • Offshore banks – engage in the same activities as full and wholesale banks for businesses transacted through their Asian Currency Unit
    • Merchant banks – provide corporate finance, underwriting of share and bond issues, mergers and acquisitions, portfolio investment management, management consultancy, and other fee-based activities

    Some of the foreign banks in Singapore that have been granted or awarded the full bank privileges of Qualifying Full Bank (QFB) to operate in Singapore include:

Digital Banks in Singapore

Similar to traditional banks, digital banks will provide the same services as such opening bank counts, deposits, and more. However, the main difference is that these digital banks will not have a physical presence and all these banking activities are conducted online.

The benefits of digital banks include:

  • Better rates and relatively lower fees during the transaction process
  • Guarantee better online experiences

  • Less paperwork makes them preferred especially in the pandemic situation

  • More flexible with transactions

These benefits, among others, make digital banks the preferred choice for most investors who come into Singapore.

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Choosing The Right Bank

With the options available, choosing the right bank after incorporation is important as it affects all your company’s financial activities.

If you are looking for banks with lower fees, then digital banks are for you. However, this will be inconvenient if you would like to withdraw cash as there will not be any ATMs or offices around.

Service fees and rates are not the only important factor to decide on your banking needs, especially so for a corporate bank account. Working with a well-trained bank will ease the bookkeeping issues and is usually kept up to standard for your annual compliance needs.

Looking to incorporate a company in Singapore or need annual compliance services? We’re here to help as you focus on growing your business! Reach out to us for a free consultation today.

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Are digital banks safe?2021-09-10T12:02:46+08:00

There is no doubt that security is one of the biggest challenges to the banking system. However, with the advancement in technology, you can rest assured that the Singapore bank system is working to ensure that your goods remain safe and your privacy is protected.

Are Singapore banks safe for my corporate transactions?2021-09-10T11:56:30+08:00

The banking system of Singapore is one of the safest globally. The regulatory authorities are taxed with the responsibility of ensuring the Singapore bank’s safety, management, and ability to meet unforeseen needs.

Which is the largest bank in Singapore?2020-12-22T12:02:07+08:00

The largest bank in Singapore and Southeast Asia is the Development Bank of Singapore (DBS). It is serving over 4 million people.

What is a digital-only bank?2020-12-22T12:02:28+08:00

The digital-only bank offers consumers’ checking accounts that do not have branches.

How safe are digital banks in Singapore?2020-12-22T12:02:41+08:00

There is no doubt that security is one of the biggest challenges to the banking system. However, with the advancement in technology, you can rest assured that the Singapore bank system is working to ensure that your goods remain safe and your privacy is protected.

What is a digital bank license in Singapore?2021-09-10T12:03:08+08:00

All the banking systems and other monetary institutions are regulated by the Monetary Authority of Singapore (MAS). As of 2019, MAS announced that it will provide digital banking licensing to digital retail banking services.

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