Grab, the regional super app startup that provides finance and ride-hailing services, announced Monday that it had entered into a partnership with Singapore Telecommunications Limited (Singtel), one of Singapore’s four major telcos, with the aim of forming a consortium to apply for a full digital banking license from the Monetary Authority of Singapore. The full digital banking license is one of five digital banking licenses that the central bank of Singapore will issue next year, with two of those being full digital banking licenses while the remaining three will be digital wholesale banking licenses. Interested parties have until the end of the year, December 31, 2019, to submit their applications.
It is understood that Grab will acquire a sixty percent stake in the consortium, while Singtel will hold the remaining forty percent. Furthermore, a statement released by both parties states that the purpose of the consortium in acquiring the full digital banking license is to offer vital financial services to the underserved segments of the market, including small-to-medium enterprises that do not have the proper access to credit, as well as providing customized solutions and services that are aimed at digital-first consumers. If the consortium manages to acquire the full digital banking license, both companies said that they will be able to offer a new way of banking that encompasses the latest developments in fintech while making banking a more direct and personalized experience. More importantly, the full digital banking license will enable Grab and Singtel to serve both retail and non-retail customers with a wide variety of financial services, such as taking their deposits.
According to Arthur Lang, chief executive officer of Singtel’s International Group, the telecommunications giant wants to take this opportunity to innovate and transform the financial space, similar to how their evolving ecosystem of digital services is constantly improving and basically transforming the lives of their customers. The partnership with Grab will enable Singtel to leverage on the unicorn startup’s substantial regional knowledge and digital prowess and to combine their extensive range of assets together to build and develop solutions and services that make banking a more intuitive and accessible experience, as well as being more affordable and streamlined.
Reuben Lai, who is senior managing director at Grab Financial Group, pointed out that the unicorn company has been particularly active in the region’s fintech and financial services ecosystem over the past 2 years, having introduced and developed various solutions and services such as insurance distribution and e-wallets. The company, therefore, views the establishment of a customer-focused and easily accessible digital bank as a natural progression towards its goal of providing a more comprehensive financial and banking experience that is both transparent and inexpensive for its consumers.
Grab has been on a tear in the fintech space lately. It had recently formed a partnership with MasterCard to introduce Southeast Asia’s first numberless payment card, which is accepted globally by over 50 million MasterCard merchants. Just two weeks ago the regional super app had also been selected by the Malaysian government to be an official partner in the country’s e-Tunai Rakyat initiative, which is aimed at driving e-wallet adoption in the country.
Besides Grab and Singtel, the other interested parties that wish to acquire a digital banking license in Singapore include FOMO Pay, a mobile payment processing solution platform, and gaming hardware unicorn Razer. Overseas banking institutions and multinational fintech companies are also reportedly looking at applying for digital banking licenses through joint ventures.
The application for the full digital banking license by the consortium of Grab and Singtel, if successful, may potentially signal a new era of disruption in Singapore’s banking industry, which had heretofore been dominated for close to two decades by local banks OCBC Bank, DBS Bank and United Overseas Bank. A successful application will also mean that Grab, the super app unicorn startup, is one step closer to becoming Southeast Asia’s dominant fintech player.