Singapore will issue as many as five new digital bank licenses to non-bank firms as the island nation seeks to strengthen competition in financial services, according to one of its top regulators.

“We welcome firms with innovative value propositions to apply for the new digital bank licenses, even if they have not yet established a track record in banking,” Monetary Authority of Singapore Chairman Tharman Shanmugaratnam said in a speech at the annual banking industry dinner on Friday. At the same time, the regulator “will not allow value-destructive competition to the detriment of long-term financial system stability,” he said.

Banks worldwide face increasing competition from technology firms that are getting into financial services including payments and lending. The UK and Hong Kong are among major economies that have allowed licenses for virtual banks, creating a new generation of rivals for traditional lenders.

Grab, Singapore’s ride-hailing giant, is considering applying for a virtual banking license if the regulator decides to allow one, Reuters reported earlier this month.

“We will study the digibank licensing requirements closely, and are keeping an open mind as we assess how best to pursue this, including whether to work with suitable partners,” said Reuben Lai, Grab Financial Group’s senior managing director.

Digital banking isn’t new in Singapore, where the regulator has allowed local lenders to pursue online-only business models since 2000. DBS Group Holdings Ltd. and United Overseas Bank Ltd., both based in the city-state, also operate digital banks in other Asian countries including India and Thailand.

DBS Chief Executive Officer Piyush Gupta has said he would only see a problem in Singapore if virtual banks were allowed to operate on more lenient terms than the incumbents, for example if their capital requirements were lower, according to an interview in May.

The MAS will invite applications from non-banks in August for the five digital banking licenses. “We will also ensure that digital banks will compete with incumbents on a level playing field,” Tharman said.

The MAS set two categories for digital banks: up to two digital full-bank licenses for firms headquartered in Singapore and controlled by Singaporeans, and an additional three licenses for digital wholesale bank ones which will be open to both local and foreign players. The second category is limited to corporate clients only, and not for the retail market, the MAS said.