Grab and Singtel hope that their jointly-formed digital bank will cater to the needs of digital-first consumers, who have come to expect greater convenience and personalization, and small-medium enterprises (SMEs) which cite lack of access to credit as a key pain point.
Under a consortium arrangement, ride-hailing and fintech firm Grab will hold a 60 percent stake whereas telco Singtel will hold the remaining 40 percent, both companies said in a joint media statement on Monday.
«In the past two years, we have launched and scaled financial services such as e-money, lending and insurance distribution into Southeast Asia’s largest fintech ecosystem. The natural next step is to build a truly customer-centric digital bank that will deliver a variety of banking and financial services that are accessible, transparent and affordable,» said Reuben Lai, senior managing director of Grab Financial Group in the statement.
The Monetary Authority of Singapore is issuing up to five digital banking licenses in 2020, two of which are full-bank licenses that permit retail banking with the remaining three licenses for wholesale banking. The applications close on Tuesday.
Formidable Assets
«We want to fundamentally change the way consumers and enterprises bank. Together with Grab, which has extensive digital expertise and experience in this region, we have a formidable set of assets and significant synergies to make banking more accessible and intuitive,» said Arthur Lang, CEO of Singtel’s International Group.
Singtel has been developing new digital growth businesses in areas such as cybersecurity and digital marketing, which will add value to the digital bank, added Lang. Together with its regional associates, Singtel aims to tap its deep local knowledge as it builds an ecosystem of digital services that include mobile financial services plus empower its customer base of more than 700 million across the region.
Serving SMEs
Beyond its ride-hailing service, Grab has built solutions in payments, rewards, lending, and insurance under its GrabPay wallet and Grab Financial in the last two years. The company has already dished out loans to several SMEs in Singapore via its joint venture with the Japanese financial services group Credit Saison. The fintech had declined to disclose the size of its SME loan book in Singapore or a target size for its SME financing business.
In Singapore, half of its borrowers have been operating for five years or less, and about half were granted loans of no more than S$30,000. Six in 10 have annual revenue of under S$1 million. Grab has said that customers can borrow up to S$100,000, with interest rates beginning from 0.7 percent a month.
