SINGAPORE, Dec 3 (Reuters) - Singapore"s digital banks will find it hard to carve out space in the city-state"s saturated market, said Piyush Gupta, the CEO of DBS Group (DBSM.SI), Southeast Asia"s biggest lender. Online-only banks are due to start operations in Singapore next year, marking the financial hub"s biggest banking shake-up in two decades. "In Singapore, it"s not that easy for digital banks to carve out space," Gupta told the Reuters Next conference on Friday, pointing to Singapore"s 98% banking penetration and incumbents" strong digital product suite. "Even in markets like Brazil and China you can see that the relative market share, size and growth of the incumbent banking system hasn"t shifted very much," he said.Singapore-based internet platform company Sea Ltd (SE.N) as well as Southeast Asian ride-hailing firm Grab"s venture with Singtel (STEL.SI) are set to start operations on a restricted basis from 2022 after they won full digital bank licences in December. But Gupta said guidelines by the Singapore regulator that ensure newer entrants have a profitable business over the next few years would prevent them from buying market share by running huge losses over time. Without a doubt, you are going to have to compete. People will come in with aggressive pricing products and so on. But on the whole, I think we"re relatively well positioned and we should be able to hold our own," he said. Over the past decade, Gupta has steered DBS into investing billions of dollars to upgrade its technology infrastructure as it embraced cloud computing and digitised its services. DBS earns most of its profit from Singapore and Hong Kong. Since Gupta took charge in 2009, DBS has broken into the ranks of the top wealth managers in Asia, acquired a bank in India and one in China over the past year, and has forayed into businesses such as a digital exchange and a global carbon exchange as it seeks new revenue streams. read more Gupta said the bank"s business momentum was robust despite the Omicron coronavirus variant spreading globally and battering markets as investors worry about the impact on economic growth. "When I look at our loan book and loan pipeline, those are quite robust, and that"s true across the region, including in China where macro numbers are slowing down. But for a player like us, we are seeing reasonably good momentum in our business there," he said. "As we are looking at our pipelines and our business projection for 2022, I think we"ll pretty much continue to see fairly similar momentum as we go into the year." Last month, DBS beat market estimates with a 31% rise in July-September net profit, aided by growth in fee income and improving asset quality. read more TECH DISRUPTION Referring to last month"s technical disruptions at DBS"s online banking services, including its payments app, Gupta apologised to customers and said they had the right to expect more from the bank. DBS had identified a problem with its access control servers. read more "But the good news is that everything behind the front door was safe. Nothing got touched, so our data was fine, there was no cyber hack and our payments were going okay," Gupta said. "So we"re doing a full review of the end-to-end process. And then we"ll come up with some understanding and findings on what we can do better as we go forward." Gupta, 61, said he had no plans to retire soon. He had a 27-year-stint at Citigroup before joining DBS. "A lot of my counterparts, certainly in the U.S. are setting the benchmark at 70. So, I have a lot of time to go and there"s nothing that is imminent." To watch the Reuters Next conference please register here https://reutersevents.com/events/next/