Singapore’s financial sector is set for a shake-up as greenfield players enter the market
On Friday, the Singaporean government granted four firms, including a partnership between Singtel and Grab, licenses to run digital banks in the country.
These digital full banks will be allowed to operate much in the same was a traditional bank, taking deposits and offering banking services to both retail and corporate customers, but without necessitating a physical location.
The process to receive a licence has been almost a year in the works, with Singtel and Grab announcing their intention to bid together at the end of 2019. Grab has 60% equity of the partnership, while Singtel makes up the remaining 40%. The process of receiving the license, however, was delayed by the coronavirus pandemic.
Singapore’s banking sector has been gradually liberalising since 1999, most notably taking major steps in 2012 to encourage foreign banks to enter the market.
Despite this, the new digital banking entrants will have their work cut out for them to carve out a market share. Even beyond the traditional challenges of entering a market in which incumbents will fight tooth and nail, the current economic situation is extremely uncertain due to the pandemic. Nonetheless, the Grab–Singtel partnership is a promising one, with major customer bases and a strong background in technology.
"With Grab and Singtel’s combined experience in meeting the everyday needs of Singaporeans, as well as our deep tech expertise and data-driven insights, the digital bank will further our goal to empower more people to gain better control of their money and achieve better economic outcomes for themselves, their businesses and families," said Grab’s CEO and co-founder Anthony Tan.
Grab–Singtel says that their first step is to hire around 200 staff for the joint venture, with goals of launching the digital banking services in early 2022.