Singapore Telecommunications Ltd has teamed up with Grab, ride hailing firm from Southeast Asia, for bidding an online banking license in Singapore. This first of its kind partnership can diversify and restructure the state’s financial sector.
The joint statement said that the partnership will entitle Grab with 60% of the shares and Singtel will own the remainder. The collaboration will serve retail and medium and small enterprises with the help of digital banking licence.
This advancement in Singapore’s banking sector in the last two decades is one of the biggest liberalisation that will authorise digital banks rather than traditional lenders such as DBS Group Holding Ltd to operate at lower costs and offer other numerous services.
However, the criteria for digital licences is stringent as it requires S$1.5 billion in paid-up capital for local control and retail banks. This is pushing potential bidders to team up for operating in the market.
Grab and Singtel, region’s largest telecommunication firm are among the best known consumer names in Southeast Asia and they are also venturing into other businesses apart from their traditional business.
Grab has ventured beyond its ride-hailing commerce to financial services and food delivery sector. Similarly, Singtel has also set its foot in online gaming and mobile payments services.
Reuben Lai, Grab Financial Group’s managing director said that the collaboration intends on building an accessible, affordable, and transparent customer-focused digital bank that will excel in providing a variety of financial and banking services.
Singapore’s central bank is ready to issue three wholesale bank licences and two digital full bank licences. The digital full banks will be capable of accepting deposits from and offer services to both non-retail and retail customers but they must be led by any Singapore-based company. Wholesale banks are more likely to serve mid-sized and small enterprises.
Arthur Lang, Singtel International Group’s CEO said that the digital banking space will be an extended version of Singtel’s already offered mobile financial services.
With stakes in worldwide telecom companies, Grab declares that its application has been downloaded by over 166 million mobile devices and Singtel has successfully reached 700 million mobile users in 21 countries.
Singapore is prepared to declare the winners by mid-2020 and the digital banks are expected to initiate operating by mid-2021.