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Grab-Singtel Consortium eyes Malaysian Digital Banking License

Multinational super app Grab and Singaporean telecommunications conglomerate Singtel joint venture enters bid for Malaysian Digital Banking license.

Multinational super app Grab and Singaporean telecommunications conglomerate Singtel's joint venture enters bid for Malaysian Digital Banking license alongside other applicants after disclosed plans to launch its digital bank early next year.

The consortium formerly applied for a Digital banking license in Singapore in December 2019 and was successful. With Grab holding a more significant 60% stake and Singtel holding 40% in the entity, the Singaporean banking license gives them the permission to take deposits and provide other online banking services to their millions of customers in the state, both retail and corporate.

Grab holding Inc. offers digital payment services to its customers and micro-financing and insurance solutions to its drivers, merchants and delivery partners for its transportation, finance and food delivery services, respectively.

A written response on its digital banking plans in Malaysia to DealStreetAsia stated, "We will do so by drawing on our track record of using tech for good, targeting Malaysia's underserved through a wide range of digital solutions as well as digital financial services in payments, lending, insurance and rewards."

The Central Bank of Malaysia, Bank Negara Malaysia (BNM), is up to issue 5 digital bank licenses in the first quarter of 2022. The Central Bank disclosed that over 40 applicants, including forestanding corporations, have shown interest in the "contest" for the limited licenses, whereby the Grab-Singtel joint venture intensified the competition.

A report given by Reuters stated that a Chinese tech giant Tencent backed consortium comprising of a real estate firm Sunway and Hong-Kong based Linklogis is also contending for a license.

"The Central Bank expects successful applicants to demonstrate a strong value proposition, focused on the unserved and underserved segments. The licensing of new players with innovative business models is expected to serve the economy and contribute to Malaysians' well-being", The Bank Negara Malaysia said.

Certain vehement corporations contending for the licenses have put in their damnedest. Budget airline, AirAsia's BigPay (In partnership with Malaysian Industrial Development Finance (MIDF), Ikhlas Capital and Malaysia's largest asset manager, Permodalan Nasional Berhad) has stated its plans to promote financial inclusion in the state if it gets a license.

"BigPay Bank will allow us to execute deeper on our mission to build a connected financial future for Malaysian consumers and entrepreneurs. If we are given the license, we will be able to reach more Malaysians with a wider range of services", Salim Dhanani, BigPay's CEO, said.

iFast Corp., a Singapore based online broker, stated that their consortium, which consists of international partners, will extend their services to the bottom 40% of Malaysians without access to traditional banking services.

Various institutions in the Malaysian digital banking license bid include a technology company Green Packet, Axiata Group, CIMB Group, Affin Bank Bhd, Hong Leong Bank Bhd, and others.

Malaysia in focus

GDP: $336.664 billion compared to Singapore's $339.998 billion in 2020

Population: 32,365,998 compared Singapore's 5,685,807 in 2020

GDP per capita: $10,401 compared Singapore's $59,797 in 2020