SINGAPORE (Dec 30): Ride-hailing firm Grab Holdings and Singapore’s largest telco Singtel are forming a consortium to apply for a digital full bank licence in Singapore, reported the companies on Monday. 

According to a joint statement, Grab will own a 60% stake in the consortium entity, while Singtel will own the remaining 40% stake. 

The consortium will set up a digital bank to cater to the needs of two groups — “digital-first consumers” who have come to expect greater convenience and personalisation as well as small and medium enterprises (SMEs) which have cited the lack of access to credit as a key pain point. 

According to the Monetary Authority of Singapore, a full digital bank licence will allow Grab and Singtel to take deposits from and provide banking services to companies in both the retail and non-retail customer segments.

The MAS had announced in June that it will issue up to five new digital bank licences for both full and wholesale banks to entities, including non-bank players, to conduct digital banking businesses in Singapore.

The applications for digital banking licences will close on Tuesday. 

According to Grab and Singtel, the consortium will be well-positioned to embed banking and financial services seamlessly into the everyday lives of their large and highly-engaged base of customers. 

“With their combined digital capabilities, fintech know-how and insights from operating customer-centric businesses, the consortium is primed to create a new, digital-first model of banking that is easy to use, affordable and accessible,” the companies said. 

Senior managing director of Grab Financial Reuben Lai pointed out that over the past two years, Grab has launched 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 Lai. 

Similarly, CEO of Singtel’s International Group Arthur Lang termed the move towards a digital bank licence “a natural extension of [Singtel’s] mobile financial services”. 

“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, and deliver much needed product simplicity, speed and affordability,” said Lang.  

Separately, other companies such as gaming equipment maker Razer and lending platform Validus Capital had previously expressed interest in applying for a digital bank licence. 

Traditional banks have also expressed interest in applications for a digital bank licence. Singapore’s second largest bank, OCBC, had reportedly been in talks with Keppel, peer-to-peer lender Validus Capital, and venture-capital fund Vertex Ventures to form a digital-bank consortium. 

The three parties were understood to have been interested in acquiring one of the three wholesale digital banking licences up for grabs. 

When contacted by The Edge Singapore, OCBC declined to comment on specific details about the progress of the consortium. 

However, in a September report, CGS-CIMB Research analyst Andrea Choong termed OCBC a “laggard in the digital banking area”, citing how DBS and UOB had comparatively stepped up their efforts in digitalising processes and had rolled out standalone digital banks in regional markets. 

“We strongly believe it will be part of a consortium in the run for a licence come end-2019,” said Choong. 

MAS is expected to announce the successful applicants by mid-2020.