Singtel ties up with Grab Group
SINGAPORE: Singapore Telecommunications Limited (Singtel) is teaming up with Southeast Asian ride hailing firm Grab to bid for an online banking licence in Singapore, the first such partnership that could spur a shake-up of the city state’s financial sector.
The companies said in a joint statement that they will form a partnership, with Grab owning 60% and Singtel holding the remainder to apply for a digital banking licence to serve retail and small and medium enterprises. The move comes as Singapore’s biggest liberalisation of its banking sector in two decades seeks to enable digital banks that can operate at lower costs and therefore offer different services than traditional lenders such as DBS Group Holdings Ltd .
But stiff criteria for digital licences, including requiring S$1.5 billion ($1.1 billion) in paid-up capital for retail banks and local control, is making it necessary for potential bidders to team up.
Singtel, the region’s largest telecommunications firm, and Grab are among the best-known consumer names in Southeast Asia and both have been expanding outside their traditional businesses.
Singtel has been pushing into areas such as mobile payments and online gaming, while Grab has grown beyond its ride-hailing roots into food delivery and financial services.
“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,” Reuben Lai, senior managing director at Grab Financial Group, said in a statement.
Sources have told Reuters they expect bidders to team up to combine banking know-how and consumer facing technology expertise and invest jointly.