As mentioned yesterday, after the Singapore government opened applications for digital banking licenses in June 2019, a total of 21 applicants came forward. Following preliminary screening, MAS announced 14 shortlisted candidates. Based on reports from various media outlets, the following eleven applicants and their respective license types were roughly identified.
Applicant
License Type
Final License Outcome
Singtel + Grab
DFB
Successfully obtained
SEA Group
DFB
Successfully obtained
Razer, Sheng Siong Holdings, FWD, LinkSure Global, Insignia Venture Partners and Carro
DFB
V3 Group, EZ-Link, Far East Organisation, Singapore Business Federation, Sumitomo Insurance and Heliconia Capital Management
DFB
MatchMove’s consortium with Singapura Finance
DFB
Standard Chartered and NTUC Enterprise
DFB
Ant Financial
DWB
Successfully obtained
Greenland Group, Linklogis Hong Kong, and Beijing Co-operative Equity Investment Fund Management
DWB
Successfully obtained
iFast Corporation, Hande and Yillion
DWB
ShengYe Capital, Phillip Capital and Advance AI
DWB
AMTD, Xiaomi, SP Group and Funding Societies
DWB
Since the Singapore government specifically emphasized sustainability, business models, and technology application, it is evident that most of the applicants were alliances formed by capital institutions, banks, and internet companies. A few specific companies, having extensive reach within their groups, applied as sole shareholders — for example, SEA Group, which owns Shopee, Garena, and Airpay, or Ant Financial, which operates across payments, lending, insurance, investments, and credit under one umbrella. It is not difficult to see that most of the shortlisted candidates had prior experience in fintech and digital banking overseas, and these companies did indeed successfully obtain the relevant licenses.
First, the alliance of Singtel and Grab. As early as 2018, Grab had already established Grab Financial, offering payments (GrabPay), insurance, lending, and other services. Lending products became a key focus starting in 2020, with the successive launch of small consumer loans and deferred payments for consumers, as well as lending products for GrabPay merchant partners and Grab drivers. Grab holds a 60% stake in this joint venture. Singtel is Singapore’s largest telecommunications, broadband, and television service company. Thanks to its plans emphasizing low call rates and high data allowances, 60% of Singapore’s nearly 1.5 million foreign workers use Singtel. Leveraging this advantage, Singtel launched the Dash overseas remittance and insurance feature in 2019 — for every monthly remittance of at least SGD 100, users received 30 days of free Dash Protect insurance, which primarily covered personal accident risks such as work injuries and disabilities.
Upon their expected launch in 2022, Singtel-Grab planned not only to expand financial product offerings within the Grab app but also to focus heavily on developing financial products for foreign workers — a demographic that has been underserved by Singapore’s existing financial services, yet has significant remittance and insurance needs. After the license announcement, Singtel’s stock surged 11%, and the company planned to hire an additional 200 people the following year to prepare for the 2022 launch.
SEA, whose major shareholder is China’s Tencent, defied the impact of COVID-19 in 2020. Despite still being in a loss-making state, SEA’s stock price rose by more than 250%. In July of that year, SEA’s valuation reached SGD 55.2 billion, surpassing DBS Group’s SGD 49.4 billion to become Singapore’s most valuable listed company. Garena was at a profitable tipping point, Shopee was growing rapidly, and it was also the leading e-commerce platform in several major Southeast Asian economies, including Indonesia, Vietnam, Thailand, Malaysia, the Philippines, and Taiwan. This provided SEA with an ideal pathway to become a regional digital bank in Southeast Asia.
Just as Alibaba has Ant Financial, SEA also launched its digital financial services arm, SEAMoney, to serve its consumer and business customers. Under SEAMoney, it operates payment products such as AirPay, ShopeePay, and Shopee PayLater. For instance, in that quarter, over 40% of transactions on Shopee in Indonesia were completed through mobile wallets. However, payments alone are not profitable, and in the highly competitive fintech landscape of Southeast Asia, SEAMoney had to compete with GrabPay, GoPay, Ovo, G-Cash, Boost, and Momo. From SEA’s quarterly report, it was revealed that SEA spent USD 65.3 million in payment subsidies in that single quarter for its Digital Finance segment. The newly obtained license would allow them to offset the hefty payment subsidies through deposit-taking, and to support SEAMoney’s losses by offering small business or personal loans through the digital bank. On the day the license was obtained, SEA’s stock price also rose by 5%.
In Singapore, nearly every digital banking license recipient stated that they planned to focus on serving underserved market segments with lower income levels — namely millennials, Gen Z, and SMEs. As for how the other two companies that obtained DWB licenses plan to serve their SME customers, we will continue the discussion in the next article.
References: MAS Announces Successful Applicants of Licences to Operate New Digital Banks in Singapore: https://user5280.pros.is/3addtc Singapore to issue digital bank licences: https://user5280.pros.is/3ah6sf MAS to review 14 bids for digital bank licences: https://user5280.pros.is/3a3w86 Singtel makes first foray into insurance market in singapore: https://user5280.pros.is/39msqc Singtel Jumps as Much as 11% on Digital Bank Win With Grab: https://user5280.pros.is/38ykvn Ant, Grab Become First Tech Firms to Run Banks in Singapore: https://user5280.pros.is/3a8h4z