SINGAPORE (June 17): Grab, Southeast Asia’s most valuable start-up, is exploring a move into Singapore banking as regulators in the city state consider allowing online-only banks into its market, four people with knowledge of the process say.
Grab is close to hiring a consultancy to advise it on its banking potential and is gearing up to apply for a digital-only bank licence in Singapore if the banking regulator decides to open up the sector, say the people, who declined to be identified, as they were not authorised to speak to the media.
Singapore-headquartered Grab’s interest in what would be its first foray into banking has not been reported before. Grab declined to comment.
Asked for a response, the Monetary Authority of Singapore (MAS) referred Reuters to its comments issued last month when it said it was studying the potential for allowing “digital-only banks with non-bank parentage” into its market. Hong Kong, Singapore’s fierce financial centre rival, began issuing licences earlier this year.
A potential entry by Grab — backed by Japan’s SoftBank Group Corp — and others would mark the biggest shake-up in years for a market dominated by DBS Group Holdings, Oversea-Chinese Banking Corp and United Overseas Bank.
MAS could make a decision in the next couple of months on whether to admit digital-only banks with non-bank parentage, as well as the eligibility of applicants, the people say.
The banking regulator is likely to issue only two to three licences in the first phase, two of the people say.
The interest from Grab underscores how Asia’s non-banking firms are keen to challenge traditional banks by leveraging their technology and their user databases to offer banking services to retail customers and small businesses.
Securing a digital banking licence in Singapore could help seven-year-old Grab benefit from its existing data on transport movements, payment transactions and consumer behaviour, the people say.
Last year, Grab teamed up with Japan’s Credit Saison Co to provide loans in Southeast Asia.
Global financial technology players are among other groups expected to seek licences in Singapore, with some of them looking to form joint ventures, say two of the people.
Consultants say a digital banking licence could also appeal to Singapore Telecommunications, which is expanding beyond its traditional carrier services into areas such as mobile payments and cybersecurity.
“It is too premature to comment, but having ventured into mobile financial services, we are open to exploring the feasibility of such an opportunity should it arise,” a Singtel spokeswoman said in an emailed response.
In Hong Kong, affiliates of Alibaba Group Holding and Xiaomi Corp, and consortia led by Standard Chartered and BOC Hong Kong (Holdings) were among those who won the digital-only banking licences.
“In Hong Kong, the guidelines were quite precise in terms of what applicants had to prove to get a virtual banking licence, more so than in Europe,” says Dan Jones, Asia-Pacific partner at consultancy Capco Digital.
“It will be interesting to see whether MAS goes down a route similar to Hong Kong’s... so that the only people who can apply are established companies, rather than literal start-ups.”
As in Hong Kong, online-only banks in Singapore are also expected to launch by offering services such as savings accounts, personal loans and travel insurance, two of the people say.
