Singapore's banks: market overview, competitive landscape, and forecast through 2023

Singapore is a significant global financial hub that provides services to both the domestic market and the Asia-Pacific region. The nation is home to numerous bank headquarters and provides convenient access to nearby markets. Since public policies have liberalised the sector and allowed for both domestic and foreign investment, the banking industry has a significant impact on the national economy of the nation. The domestic market is very developed, with nearly everyone having access to a bank account and one of the highest rates of credit card adoption in Asia. The nation's central bank, Singapore's Monetary Authority of Singapore (MAS), which was founded in 1971, oversees the industry.  

The MAS oversees payment systems, foreign exchange reserves, and monetary policy. Singapore is steadily establishing itself as a fintech hub through the Smart Nation programme, supported by a highly connected population. The nation is among the most advanced in the area when it comes to implementing cashless transactions, with the greatest average transaction value for digital payments.

 

Singapore's banking system is known for its stability, innovation, and efficiency. The country has a well-developed banking infrastructure, with a strong regulatory environment and a competitive landscape that includes both local and international players. 




Market Overview: Singapore's banking sector is dominated by three major local banks, namely DBS Bank, United Overseas Bank (UOB), and Oversea-Chinese Banking Corporation (OCBC). These three banks together account for around 80% of the total assets in the banking sector. There are also several foreign banks operating in Singapore, including Citibank, Standard Chartered, HSBC, and Maybank. 


The total assets of the banking sector in Singapore grew from SGD 2.83 trillion in 2017 to SGD 3.18 trillion in 2020. The net interest income of the banking sector grew from SGD 25.8 billion in 2017 to SGD 28.6 billion in 2020. The banking sector in Singapore has a high concentration of loans to the commercial and industrial sectors, which accounted for 41.5% of total loans in 2020. 


Competitive Landscape: The competitive landscape of Singapore's banking sector is dominated by the three major local banks, DBS, UOB, and OCBC. These banks have been able to maintain their market dominance due to their strong balance sheets, innovative products and services, and a focus on customer service. 


In recent years, there has been increased competition from digital banks, such as Grab Financial and Sea Group's SeaMonkey. These digital banks have disrupted the traditional banking model by offering innovative services, such as mobile payments and loans, and lower fees. However, it remains to be seen how much market share they can capture in the highly competitive Singapore banking sector. 


Forecast through 2023: The banking sector in Singapore is expected to continue growing, albeit at a slower pace, due to the ongoing COVID-19 pandemic and global economic uncertainty. The IMF projects that Singapore's economy will grow by 5.2% in 2021 and 3.8% in 2022, which will support the growth of the banking sector. 


The three major local banks are expected to continue dominating the market, with digital banks increasing their market share. The Singapore government has also been encouraging the growth of digital banks, with plans to issue up to five digital bank licenses soon. This is expected to further increase competition in the banking sector and drive innovation and digital transformation. Overall, the outlook for Singapore's banking sector remains positive, with steady growth expected in the coming years. 

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