Can Overseas Companies Establish Digital Banks? An Analysis of Opportunities and Challenges

Can Overseas Companies Establish Digital Banks? Analyzing the Opportunities and Challenges Behind It

With the continuous advancement of financial digitization worldwide, digital banks are gradually becoming an integral part of national financial systems. Compared to traditional banks, digital banks leverage internet technology to provide more efficient, convenient, and cost-effective financial services that cater to modern consumers’ demand for personalized and instant financial experiences.

In recent years, many overseas companies have begun to explore this field, aiming to expand their influence in global financial markets by setting up or acquiring digital banks. The question is Can overseas companies establish digital banks? The answer is yes-but the process is far from simple. From regulatory environments to market access, as well as technical capabilities and localized operations, all present a series of opportunities and challenges that foreign firms must navigate when establishing digital banks abroad.

1. Policy Liberalization Driving Digital Bank Development

In recent years, several emerging markets have introduced policies to encourage the development of digital banking. In Southeast Asia, for example, countries like Singapore, Malaysia, and Indonesia have launched digital bank licensing systems in recent years, allowing qualified entities to apply for licenses to establish fully digital banks.

For instance, in 2025, the Central Bank of Indonesia approved the first five digital banking licenses, including institutions led by foreign-backed enterprises. These measures send a clear signal More and more countries are willing to open the door to international capital in the banking sector, provided it brings innovation, enhances financial inclusion, and ensures financial stability.

Developed countries are also gradually easing restrictions on digital bank entry. The UK and Canada have seen tech-driven digital banks such as Revolut and Starling Bank not only serving domestic clients but also expanding aggressively into overseas markets.

2. Tech Companies as New Entrants in Digital Banking

Among the many overseas companies attempting to enter the digital banking space, technology firms stand out. Multinational tech giants such as Google, Amazon, Apple, Alibaba, and Tencent are leveraging their massive user bases, data processing capabilities, and platform ecosystems to explore fintech strategies in multiple countries.

For example, in early 2025, Apple announced the launch of its Apple Savings account in the European market-a savings product developed in partnership with Goldman Sachs. While not a full-fledged digital bank, it already exhibits partial banking functionality.

At the same time, non-financial companies are also entering the digital banking arena. For instance, Grab, the Southeast Asian ride-hailing app, obtained a digital banking license from the Monetary Authority of Singapore MAS in 2025 and officially launched GrabFin, offering services including payments, loans, and insurance. This cross-sector convergence shows that digital banking is no longer the exclusive domain of financial institutions-it has become an important tool for various industries to integrate resources and expand revenue models.

3. Multiple Challenges Facing Overseas Companies in Setting Up Digital Banks

Although favorable policies and technological advancements make it possible for overseas companies to enter the digital banking sector, the actual implementation presents numerous challenges.

Firstly, high regulatory barriers exist. Although many countries welcome foreign investment in digital banking, they impose strict requirements on applicants’ capital strength, risk control capabilities, and anti-money laundering mechanisms. For example, Singapore’s MAS sets minimum capital requirements for digital banking license applicants and requires detailed business plans and risk management frameworks. Moreover, regulatory frameworks vary significantly across jurisdictions, creating complex compliance challenges for cross-border operations.

Secondly, competition is fierce. While digital banking is still an emerging sector, it has attracted a large number of players. Whether local fintech startups or established financial groups with existing licenses, all are competing for limited market share. Especially in emerging markets such as Southeast Asia and Latin America, local fintech firms often better understand local consumer behavior and financial needs, making it difficult for foreign firms-even those with strong technical advantages-to quickly build brand awareness and customer loyalty.

Thirdly, localization poses significant operational difficulties. The success of a digital bank hinges on deep understanding of the local market. Differences in language, culture, payment habits, and credit systems can impact user experience and service efficiency. For example, while credit cards are widely used in Europe and the U.S., electronic wallets and QR code payments dominate in Asia. If overseas companies fail to consider local characteristics in product design, they may face severe cultural clashes.

Lastly, cybersecurity and data privacy remain critical concerns. Digital banks heavily rely on online platforms and big data analytics, making them particularly vulnerable to cyber threats. Recent global data breaches have served as a wake-up call for the financial industry. For overseas companies, ensuring user data security while complying with diverse data protection laws across jurisdictions is one of the core issues that must be addressed.

4. Future Trends and Recommendations

Looking ahead, digital banking will continue to be a key direction for global financial innovation. For overseas companies seeking to enter this field, the following areas deserve close attention

Strengthen strategic collaboration with local partners. Partnering with local financial institutions or tech firms can help reduce entry barriers and improve operational efficiency.

Focus on product differentiation. In a highly competitive market, only products that truly meet users' needs will stand out. For example, tailored financing solutions for SMEs or simplified account-opening processes for the unbanked population.

Continuously optimize the technology infrastructure. Building a robust, flexible, and scalable technology platform is essential for long-term growth. Cybersecurity and data governance should also be top priorities.

Emphasize sustainability. Concepts such as green finance and inclusive finance are gaining traction. Digital banks that incorporate ESG Environmental, Social, and Governance principles into their business models are more likely to gain regulatory support and public trust.

Conclusion

Establishing a digital bank overseas is by no means easy, but it is certainly achievable. With the right positioning, careful planning, and steady execution, overseas companies can carve out a place in the ongoing transformation of the global digital financial landscape.