Singtel teams up with Grab to bid for digital bank licence

Remote video URL
Grab will hold a 60 per cent stake in the consortium that they formed, while Singtel will hold the remaining 40 per cent. PHOTOS: ST FILE

Singtel and Grab are making a bid for a digital full bank licence together, deepening their venture into the financial sector.

Both companies are forming a consortium to make the bid, with ride-hailing firm Grab holding a 60 per cent stake in it and the Republic's largest telco taking up the remaining 40 per cent.

A digital full bank licence will allow Grab and Singtel to serve retail customers as well as businesses. They are allowed to take deposits as well as extend loans.

Grab and Singtel said in a statement: "The digital bank will aim to cater to the needs of digital-first customers, who have come to expect greater convenience and personalisation, and small and medium-sized enterprises, which cite lack of access to credit as a key pain point."

They added that the consortium aims to be well positioned to offer relevant products and services and become a trusted partner for consumers and enterprises.

Both companies already provide e-wallet services. Singtel has Dash, while Grab, which also offers delivery services, has GrabPay.

Singtel has been working on a regional alliance of e-wallets that will allow users to pay for their purchases overseas with their local e-wallets. Grab has ventured into insurance and lending, according to previous media reports.

  • 60%

  • Stake that Grab will hold in the consortium with Singtel.

The Monetary Authority of Singapore (MAS) announced in June that it will issue up to five new digital bank licences for both full and wholesale banks to players who may not have an established record in banking. It will stop accepting applications today.

Other organisations that have expressed interest in applying for the licence include NTUC Enterprise, the V3 Group and Razer.

A V3 Group spokesman said that the company is committed to developing innovative digital financial offerings for the underserved in Singapore and the region, but would not say if it has applied for the licence.

Razer is still exploring the virtual bank licence, a company spokesman said, without elaborating. He said that updates will be provided if and when the company decides to submit an application.

An NTUC Enterprise spokesman said that the organisation will, from time to time, explore and evaluate different opportunities that present themselves.

He added that the organisation is unable to comment on any specific opportunities at this point.

The Business Times reported yesterday that a consortium comprising OCBC Bank, Keppel Corporation and Validus Capital fell through as Keppel is undergoing a strategic review of its core operations. Temasek Holdings is due to take control of the conglomerate via a partial offer.

The MAS move to issue digital-only bank licences has been called the biggest industry shake-up since 1999, when foreign banks were allowed to come into Singapore in a greater way.

One of the measures it implemented then was to create a licensing category for foreign banks called Qualifying Full Banks to encourage competition with local banks. Licensees could have more places of business, compared with other foreign banks.

Digital-only banks tend not to have physical branches and tellers, which also means that they can offer customers higher interest rates for their deposits.

Digital banks can also make their services more palatable to their target markets. For example, Monzo in Britain allows millennials to set monthly budgets for groceries and entertainment, as well as split bills with their friends to help them keep track of their spending.

Singtel and Grab will know if their application has been approved by the middle of next year.

Join ST's Telegram channel and get the latest breaking news delivered to you.

A version of this article appeared in the print edition of The Straits Times on December 31, 2019, with the headline Singtel teams up with Grab to bid for digital bank licence. Subscribe