Grab eyes Singapore banking licence as MAS studies feasibility of virtual banks

Singapore

GRAB, South-east Asia's most valuable startup, is exploring a move into Singapore banking as regulators in the South-east Asian city-state consider allowing online-only banks, four people with knowledge of the process said.

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, said the sources, 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 comment.

When asked for a response, the Monetary Authority of Singapore (MAS) referred Reuters to its comments issued last month when it said that 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 - and others would mark the biggest shake-up in years for a market dominated by DBS, OCBC and UOB.

The 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 applicants, the sources said.

The city-state's banking regulator is likely to issue only two to three licences in the first phase, two of the sources said.

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 to benefit from its existing data on transport movements, payment transactions and consumer behaviour, the sources said.

Last year, Grab teamed up with Japan's Credit Saison to provide loans in South-east Asia.

Global fintech players are among other groups expected to seek licences in Singapore, with some of them looking to form joint ventures, said two of the sources.

Consultants said that a digital banking licence could also appeal to Singtel, which is expanding beyond its traditional carrier services into areas such as mobile payments and cyber security.

"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 spokesman said.

In Hong Kong, affiliates of Alibaba Group Holding and Xiaomi Corp, and a consortia led by Standard Chartered and BOC Hong Kong Holdings were among those that won the digital-only banking licences.

"In Hong Kong, the guidelines were quite precise in terms of what applicants had to prove in order to get a virtual banking licence, more so than in Europe," said Dan Jones, the Asia-Pacific partner at consultancy Capco Digital.

"It will be interesting to see whether MAS goes down a similar route to Hong Kong . . . so that the only people who can apply are established companies, rather than startups."

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 sources said. REUTERS