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Grab confirms application for Singapore banking license to tap SMEs and 'gig' workers

Super app plans to become 'largest fintech ecosystem in Southeast Asia'

Grab has diversified its businesses from ride-hailing to food delivery to financial services to be more profitable.   © Reuters

SINGAPORE -- SoftBank Group-backed unicorn Grab will submit an application for a digital banking license in Singapore, the company has confirmed, as it sees the financial businesses as a driver for future growth.

If Grab successfully obtains the license, consumers as well as small and medium-sized businesses would have access to deposit, lending and other financial services -- a major step toward becoming the leading tech company position in Southeast Asia.

In an interview with the Nikkei Asian Review Saturday, Reuben Lai, head of Grab Financial Group, the company's financial unit, said: "We will be applying for the digital banking license in Singapore" before the December 31 submission deadline.

"The banking license unlocks more opportunities for us to roll out more services to serve our customers," Lai said. "Grab Financial Group is a major pillar of growth for Grab, and for us to be able to get a banking license will cement our position as the largest fintech ecosystem in Southeast Asia."

Singapore's central bank will issue up to five digital banking licenses -- two full bank licenses and three wholesale bank licenses -- to advance the banking sector liberalization. Grab will apply for the full bank license that will allow the licensee to offer services to both retail and non-retail customers, Lai said.

Grab had expressed interest in the license when Singapore announced the liberalization in June, but it had not clearly said whether or not it would actually apply. According to Lai, Grab will apply with a partner which "has a huge ecosystem consisting of both consumers and micro merchants."

"What we want to do with the banking license is to bring more transparency, more accessibility to the users," Lai said. "It's about how we allow the users in Singapore to experience banking in a way that is very seamless, very easy to use, and they don't need to worry about hidden fees." He did not provide details of the plan such as the interest rate on deposits.

With dozens of parties being interested in the new licenses, Grab will compete with other fintech startups and established companies, where sustainable business model and value propositions are among selection criteria. Lai said he is confident to be chosen: "I think we are believed to be front-runners in this."

Grab's Reuben Lai (Photo by Kentaro Iwamoto) 

Founded in 2012, Grab has diversified its businesses from ride-hailing to food delivery to financial services. It currently offers financial services in Singapore, Indonesia, Malaysia, Thailand, the Philippines and Vietnam.

Being the region's most advanced economy, Singapore's banking market is seen already saturated by existing players. But Lai stressed there are still "pockets of unmet needs," citing small and middle-sized businesses and "gig economy workers" -- such as ride-hailing drivers and food-delivery staff -- who typically work for platforms like Grab.

Lai said Grab would look into opportunities in banking in other Southeast Asian countries if they follow Singapore to allow non-banks to become virtual banks. "It's not surprising that there's interest in the regulators around the region... If the opportunity arises, we would love to participate."

The Monetary Authority of Singapore is expected to announce the licensees in mid 2020.

Regardless of the results of the banking license application, Grab will launch wealth management services that would let users and partner merchants make small investments by using the balance on their Grab account. This will be launched in the first half of next year, starting in Singapore, he said.

Grab counts SoftBank, Toyota Motor, Uber Technologies and Microsoft as key shareholders. It is valued at $14.3 billion, according to CB Insights, being the largest unlisted startup in Singapore.

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