Grab Holdings Inc is partnering with Singapore Telecommunications Ltd (Singtel) to apply for a full digital banking license, jumping aboard a Singaporean government initiative to attract technology firms into its financial sector.
A Grab entity is to own a 60 percent stake in the consortium that will apply for the bank license in Singapore, while the telco known as Singtel is to hold the rest, according to a joint statement.
The consortium plans to set up a digital bank targeting so-called digital-first consumers, as well as small and medium enterprises that lack access to credit.
The Monetary Authority of Singapore unveiled plans this year to grant as many as five virtual bank licenses to boost competition and innovation.
Of these, two will be full bank licenses and three wholesale licenses limited to serving corporate clients only: The first category requires capital of S$1.5 billion (US$1.1 billion); the second S$100 million.
Southeast Asia’s digital lending market is expected to more than quadruple to US$110 billion by 2025, according to a report by Bain & Co, Google and Temasek Holdings Pte.
Bids for the new virtual licenses are due by the end of the year. Several other groups have expressed interest in joining Singtel and Grab in applying, including billionaire Alibaba Group Holding Ltd (阿里巴巴) founder Jack Ma’s (馬雲) Ant Financial Services Group (螞蟻金服), gaming gear-maker Razer Inc and Oversea-Chinese Banking Corp (華僑銀行).
Efforts to open up the Singapore banking industry to technology companies come on the heels of a similar move in Hong Kong, where Ant Financial and Chinese competitors, including Tencent Holdings Ltd (騰訊), obtained licenses 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.
Grab does not disclose the number of users — which include many for food delivery — but said its app has been downloaded onto more than 166 million mobile devices in Southeast Asia.
The company, which started out as a taxi booking app in Kuala Lumpur in 2012, has expanded into financial services across Southeast Asia in partnership with 60 financial institutions, including United Overseas Bank Ltd (大華銀行) in Singapore and Malayan Banking Bhd in Malaysia.
It set up the Grab Financial Group last year, which, among other things, provides digital payments services and personal loans. It also launched a numberless card with Mastercard Inc 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 company swung to a net loss of S$668 million in the quarter ended September, due to an exceptional item related to Bharti Airtel Ltd.
The carrier has been offering its own mobile payments service in cooperation with regional associates, including in Thailand. Users can pay via its Dash app when traveling wherever Dash’s partners are located. The app can also be accessed through Apple Pay.
Digital banking is a natural extension of the company’s existing mobile financial services, Singtel’s International Group CEO Arthur Lang said.
“We want to fundamentally change the way consumers and enterprises bank,” he said.
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