Grab Holdings has partnered with Singapore Telecommunications (Singtel) to apply for a full digital banking licence, jumping aboard a Singapore government initiative to attract technology firms into its financial sector, reported Bloomberg.
A Grab entity will own a 60 per cent stake in the consortium that will apply for the bank licence in Singapore, while Singtel will hold the rest. The consortium plans to set up a digital bank targeting so-called digital-first consumers, as well as SMEs that lack access to credit.
The Monetary Authority of Singapore unveiled plans this year to grant as many as five virtual bank licences to boost competition and innovation. Of these, two will be full bank licences and three wholesale licences limited to serving corporate clients only—the first category requires capital of SGD 1.5 billion ($1.1 billion), the second SDG 100 million.
According to a report by Bain & Co., Google and Temasek Holdings, Southeast Asia’s digital lending market is expected to more than quadruple to $110 billion by 2025. Bids for the new virtual licences are due by the end of the year.
Several other groups have expressed interest in joining Singtel and Grab in applying, including billionaire Alibaba founder Jack Ma’s Ant Financial, gaming gear-maker Razer and Oversea-Chinese Banking Corporation.
Efforts to open up the Singapore banking industry to technology companies come on the heels of a similar move in Hong Kong, where Ant and Chinese competitors including Tencent Holdings obtained licences earlier this year.
For Grab, a digital banking business complements its growing suite of services built atop a ride-hailing platform that is expanding regionally. Its advantage over other non-bank companies is an existing share of online payments built up under the GrabPay brand from ride-sharing users and local merchants.
The company has expanded into financial services across Southeast Asia in partnership with 60 financial institutions including United Overseas Bank in Singapore and Malayan Banking in Malaysia.
Additionally, the technology giant launched Grab Financial Group in 2018, which, among other things, provides digital payments services and personal loans. It also launched a numberless card with Mastercard and plans to start wealth management services next year.
Singtel has delved deeper into financial services as growth in its core telecoms business plateaus in an uncertain economy. The carrier’s been offering its own mobile payments service in cooperation with regional associates.