Bryan TanRavi Menon, managing director of the Monetary Authority of Singapore (MAS), said new "players" would gain access to Singapore's own banking market to help them grow.
"The hope is that some of these players that come in with very advanced data analytics capabilities can do credit evaluation and loan extension in a much cheaper and faster way than traditional banks would do," Menon said in a video interview with Bloomberg.
"We see some of these players becoming regionally important. Looking ahead, Singapore wants to be a base for these players as they grow in the region, and that means anchoring them here at an early stage of their development and allowing them access to the domestic banking market," he said.
Menon acknowledged that if more businesses enter Singapore's banking market then it could lead to consolidation. He said MAS is keen to support collaboration between incumbents and new "players" to drive innovation.
"What we would like to see are interesting joint ventures and combinations between traditional financial services and non-financial players," Menon told Bloomberg. "That really harnesses and synergises rather than consolidation on its own, which is really about cutting cost, which I am not sure is the paramount need for now."
"No regulator would want to see an overly concentrated banking sector. It just concentrates risk too much in a few players, and I think having some diversity in the banking landscape is not a bad thing," he said.
Menon was commenting ahead of Singapore Fintech Festival 2019, which runs from 11 to 13 November. It is the world's largest fintech event.
Technology law expert Bryan Tan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, said: "MAS has been proactive in supporting fintech innovation in recent times and there seems to be a push by both the regulator and the Singapore government to develop Singapore into the clear Asian fintech leader."
"Some of the most prominent developments include the establishment of new payment service laws, which will underpin innovation in e-payments, and the move to support new digital banks operating in Singapore. It is likely we will hear more about the progress of the digital bank licenses during the Singapore Fintech Festival," he said.