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The Singapore Banking Sector: Guide for Global Entrepreneurs and Investors

The Singapore Banking Sector: Guide for Global Entrepreneurs and Investors

For foreign entrepreneurs and investors eyeing the Asia Pacific region, Singapore stands out as a singular beacon of opportunity. That is not opinion — the Global Financial Centres Index ranks Singapore as Asia’s top financial centre, and third globally only to New York and London.

Since its meteoric rise from a modest trading post in the 1960s to a global economic powerhouse, Singapore’s story has been nothing short of miraculous. Central to this transformative journey has been its robust banking and financial sector, serving as a foundational pillar propelling the nation’s growth.

For foreign entrepreneurs and investors eager to capitalise in untapped markets in the Asia Pacific, understanding the intricacies of Singapore’s banking landscape becomes indispensable.

Get Advice on the Singapore Banking Scene

In this article, we will explore the historical growth of the banking industry, pivotal trends shaping its future, the diverse range of services tailored for businesses, and the major players that dominate the scene.

By the end of this comprehensive overview, you will be equipped with the knowledge to navigate and leverage the opportunities that the Singaporean banking sector presents.


Singapore’s banking industry has witnessed a series of transformative events, policies, and legislation since the 1970s. These have not only shaped its current stature but also laid the foundation for its future trajectory.

1970s-1980s: Expansion and Liberalisation

During the 1970s and 1980s, Singapore’s banking industry witnessed significant growth, with the government introducing policies to attract foreign banks and investments. This period also saw the emergence of Singapore as a key player in the Asian Dollar Market, further cementing its position as a regional financial hub.

Notably, the Monetary Authority of Singapore (MAS) was established in 1971, consolidating various financial regulatory functions into a single entity. This move ensured that the banking sector had a clear regulatory framework, fostering trust among foreign investors and banks.

1990s: Technological Advancements and Regional Expansion

The 1990s were marked by rapid technological advancements in the banking sector. Singaporean banks were quick to adopt new technologies, offering innovative products and services to their customers.

Internet banking, electronic payments, and other digital banking services became increasingly popular as technology allowed. Additionally, Singaporean banks began expanding their operations in the region, capitalising on the growing economies of neighbouring countries.

1999-2001: Liberalisation of the Banking Sector

In May 1999, MAS launched a five-year liberalisation package aimed at strengthening the banking system and enhancing Singapore’s reputation as an international financial centre.

This included issuing Qualifying Full Bank (QFB) licenses to foreign banks, increasing the number of restricted banks, and providing offshore banks with more flexibility in the Singapore Dollar wholesale business. The 40% foreign shareholding limit in local banks was also lifted.

The SGX was also formed in 1999 following the merger of two separate entities: the Stock Exchange of Singapore (SES) and the Singapore International Monetary Exchange (SIMEX).

The second phase began in June 2001, focusing on improving competitiveness in retail banking. QFBs received more privileges, and consolidation of local banks was encouraged to provide resilience and stability, especially during financial crises.

2000s: Growth of Private Banking and Investment Banking

Singapore capitalised on the increasing number of high-net-worth individuals (HWNIs) in Asia, Europe, and the Middle East, emerging as a premier private banking destination. This growth was supported by strict banking secrecy laws, non-recognition of the 2005 European Tax Directive, and generous tax incentives.

Major private banks like UBS, Credit Suisse, Citigroup, and Standard Chartered expanded their offerings, providing a range of wealth management and advisory services.

Concurrently, Singapore matured into a key international debt arranging hub in Asia, with initiatives like the Approved Bond Intermediary Scheme and the growth of SGX as an international exchange.

High standards for investor confidence were maintained through measures like the Code of Corporate Governance and revisions to the SGX listing rules.

2010s-Present: Strengthening of Local Banking Groups and Embracing FinTech

The local banking sector underwent significant consolidation, with the six local banking groups merging into three main banks: DBS, OCBC, and UOB.

These mergers strengthened the banks’ capabilities, expanded their range of business activities, and enhanced their risk management practices. With a stronger financial foundation and increased domestic competition, local banks began expanding overseas.

Singapore’s banking industry has also been at the forefront of FinTech innovation, with a growing emphasis on sustainable banking and the integration of environmental, social, and governance (ESG) factors.


Types of Banks in Singapore

In Singapore, most banks offer a range of services tailored to diverse clientele, including individuals, corporations, and government agencies.

These banks specialise in commercial banking, providing comprehensive solutions for businesses and corporations, retail banking, catering to the financial needs of individual members of the public, and private banking, offering personalized services specifically designed for high-net-worth individuals (HNWIs).

Bank Type Examples Details
Local Bank DBS, UOB, OCBC These major local banks provide essential financial services to individuals, businesses, and government agencies within the country.
Foreign Bank Standard Chartered, HSBC, Citibank, Maybank These banks are further categorised into:

  • Full Banks
  • Wholesale Banks
  • Offshore Banks
  • Merchant Banks
Digital Bank ANEXT, Maribank, Green Link, Trust Bank, GXS These are financial institutions that operate primarily online, providing banking services through digital platforms and without physical branch locations.
Neobank Wise, Revolut, YouTrip Neobanks in Singapore are fintech companies that offer digital and mobile-first financial services to customers. These banks operate entirely online, providing a range of banking services such as payments, money transfers, loans, and more through digital platforms and mobile applications.

Related Read: Banking on the Best: Digital Bank vs Neobank


Bank Regulations in Singapore

The banking regulatory framework in Singapore plays a vital role in maintaining a robust and secure financial system, further enhancing Singapore’s reputation as a leading global financial hub.

Banking regulations are overseen by the Monetary Authority of Singapore (MAS), which serves as the sole bank regulator and the central bank of the country. 

MAS regulates financial institutions in the banking, capital markets, insurance, and payments sectors. Their role includes setting and enforcing regulations and licensing requirements for these sectors.

To conduct banking business in Singapore, banks must be licensed by the MAS. There are different categories of bank licenses, including full bank licenses. Banks operating in Singapore must comply with various regulatory frameworks, such as the Banking Act 1970 and its subsidiary legislation.

Here are some of the prominent banking legislations and regulatory frameworks:

  • Banking Act 1970
  • The Monetary Authority of Singapore (MAS)
  • The Securities and Futures Act (SFA)
  • Anti-Money Laundering Guidelines

Achievements of the Singapore Banking Sector

Singapore’s banking and financial evolution has led to some remarkable milestones that have positioned it as a global leader in various financial domains. Here’s a look at some of the significant achievements of the Singapore banking sector:

Singapore Exchange (SGX): A Preferred Global Listing Destination

The Singapore Exchange (SGX) stands as one of the most established capital markets in the Asia-Pacific region. Its reputation and robust regulatory framework have made it the preferred listing location for over 600 companies. This underscores Singapore’s appeal as a global financial hub and its ability to attract and retain international business entities.

A Haven for Fixed-Income Investors

For those with fixed incomes looking for investment opportunities, Singapore presents a vast array of options. The country boasts an extensive range of Singapore government securities and foreign corporate bonds. 

This wide availability ensures that fixed-income investors have a myriad of investment avenues to explore, catering to different risk appetites and investment horizons.

Leading the REITs Market in Asia

Singapore’s prowess in the Real Estate Investment Trust (REITs) market is unparalleled in Asia, excluding Japan. Furthermore, Singapore offers an extensive range of investments in business trusts, encompassing diverse sectors such as shipping, aviation, and infrastructure assets. 

This diversity provides investors with many opportunities to diversify their portfolios and tap into different industry sectors.

Premier Asset Management Location

Singapore’s reputation in asset management is well-recognised. With total assets under management hovering over US$4 trillion, Singapore is acknowledged as one of the premier asset management locations in Asia. 

This is a testament to the city-state’s robust regulatory framework, strategic location, and the trust global investors place in its financial ecosystem.

Forex and Derivatives Trading Hub

Singapore’s position in the world of foreign exchange is noteworthy, being the third largest foreign exchange trading centre globally. But its financial prowess doesn’t end there — Singapore is also ranked 8th globally by trading volume in over-the-counter (OTC) derivatives. 

Its strategic location and advanced infrastructure have also made it a leading commodities derivatives trading hub, facilitating trade and investments in this crucial sector.

Services Tailored for Small and Medium Enterprises (SMEs)

Singapore is not just for the big players — both local and foreign banks in Singapore have recognised the significance of SMEs. They offer a wide range of financial services tailored to meet their needs, ranging from deposit products, cash management services, and loan products, to trade financing services. 

Additionally, the Singaporean government has introduced financing schemes to assist SMEs in their growth and modernisation endeavours.


Where to Next for Taking Advantage of the Singapore Banking Sector

Singapore’s banking sector, with its rich history, robust regulatory framework, and forward-looking innovations, offers a plethora of opportunities for international entrepreneurs and investors. As Asia’s leading financial hub, it provides a stable and growth-oriented environment for businesses to thrive. 

If you are looking to navigate the complexities of the Singaporean banking landscape and leverage its opportunities, InCorp is here to guide you every step of the way. Reach out to InCorp today and let us help you unlock the full potential of Singapore’s dynamic banking sector.

FAQs

  • Singapore is ranked as Asia's top financial centre due to its robust regulatory framework, strategic location, and the presence of numerous global financial institutions.
  • Singapore offers a range of opportunities, including a thriving private banking sector, a robust REITs market, and a dynamic forex and derivatives trading hub.
  • InCorp has in-depth knowledge of the Singaporean banking landscape and can provide expert guidance to international entrepreneurs and investors looking to leverage the opportunities it presents.

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About the Author

Eric Chin

Eric comes from banking background. He provides consultancy to local and foreign entities on the ideal market-entry strategies for setting up or expanding operations in Southeast Asia. Eric also provides advisory to fund managers and family offices on structuring as well as applicable tax incentives. He has also set up many VCC structures for licenced fund managers.

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