Grab, Singtel to Launch Digital Bank in Singapore
Grab and Singtel's partnership would solve a very pertinent problem that Southeast Asians face
By Aparajita Saxena •
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Singapore's Grab on Monday said it would partner with communications company Singtel to form a digital bank that would cater to digital-first consumers, as well as SMEs.
The two companies have applied for a digital banking license in Singapore.
Grab will hold 60 per cent of the digital banking company, while Singtel will hold a 40 per cent take, the companies said in a joint press release.
Grab has been working to grow its financial offerings over the last two years in the form of a wallet and payment service called GrabPay, along with online insurance and lending.
"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.
The company introduced GrabPay in 2016, and launched its financial arm in 2018. Its partnership with Singtel would give the 'superapp' unicorn access to more than 700 million users across Southeast Asia.
Solving Problems for the Underbanked in Asia
Grab and Singtel's partnership would solve a very pertinent problem that Southeast Asians - especially those in the rural areas - face: lack of access to banking services.
Of the 400 million adults that live in Southeast Asia, only 104 million are fully "banked", and have full access to financial services, which leaves 198 million people that do not have even rudimentary access to financial institutions, a recent joint study by Google, Temasek and Bain & Co recently showed.
Problems like infrastructure costs, absence of public registers and reliable credit information, along with stringent financial regulations, make it difficult for institutional banks and insurers to penetrate the region in a meaningful way.
Fintech companies in the region have tried to plug that gap, and using Asia's rapid tech innovation, boomed into a multi-billion dollar industry in the region, serving tech savvy millennials, and undocumented Asians alike.
Digital payments are expected to cross $1 trillion by 2025 in Asia, and account for nearly one in two dollars spent in the region. The market for e-wallets is expected to grow even faster, from $22 billion in 2019, to $114 billion, a more than fivefold jump, by 2025, the Google joint study said.
