SINGAPORE -- SoftBank Group-backed super app operator Grab said Monday that it has formed a consortium with Singapore Telecommunications, Southeast Asia's largest telecom operator, to apply for a digital banking license in Singapore.
The consortium submitted an application ahead of a Dec. 31 deadline for digital banking licenses that the government plans to issue.
With two big names joining forces, the consortium will be a strong candidate for the new licenses that have already drawn interest from many fintech players. If it obtains a license, Grab and Singtel could capitalize on their existing customer bases to offer banking services for consumers and businesses in Singapore.
Reuben Lai, head of Grab's finance unit, earlier had told the Nikkei Asian Review that the company would apply with a partner that has a vast ecosystem that would complement its own.
Singtel has over 4 million mobile customers in the city-state. It also has been expanding its mobile-based financial services as Singapore's mobile sector matures, including its mobile wallet called Dash, which has about 1 million registered users.
Singtel's move into the banking space is "a natural extension of the mobile financial services," Arthur Lang, CEO of the company's International Group, said in statement.
"Together with Grab... 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," Lang said.
Grab will hold a 60% stake in the consortium that is setting up the joint venture, while Singtel will have the remaining 40%.
Singapore's central bank will issue up to five digital banking licenses -- two full bank licenses and three wholesale bank licenses. The Grab-Singtel consortium has applied for the full bank license, which will allow the licensee to offer services to both retail and non-retail customers.
Grab and Singtel will compete with other fintech players for the licenses, where sustainable business models and value propositions are among the criteria.
Among the fintech companies that have expressed interest in the license are peer-to-peer lending firm Validus Capital and digital payment processing platform FOMO Pay. China's Ant Financial Services Group, the operator of Alipay, was also reportedly eyeing the Singapore license.
"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 statement said.
The central bank will close applications on Tuesday and is expected to announce the license awardees in mid-2020.
Ride-hailing unicorn Grab operates in eight countries in Southeast Asia, while Singtel has a wide presence in the region. As both companies are keen to expand financial services regionally, they could eventually collaborate businesses outside of Singapore as well.