[Disclaimer: Opinions are our own and does not reflect the actual features of the Grab-Singtel and Sea digital bank.]
Last year, the Monetary Authority of Singapore (MAS) announced the grant of digital bank licenses to four winning applicants.
It awarded digital full bank licenses to the Grab-Singtel consortium and Sea, as well as digital wholesale bank licenses to Ant Group and a consortium comprising Greenland Financial Holdings, Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management.
MAS’ intention is for a digital full bank to eventually be able to conduct all banking businesses as existing banks, which aims to serve both retail and corporate consumers.
Like a traditional bank, digital banks provide Singaporeans with banking services like an account, deposits, loans, debit and credit cards, payments and investment products.
While the concept is not new, it marks Singapore’s first foray into building digital banks.
Here’s what we think a Grab-Singtel and Sea digital bank could look like, and the possible services and features it could offer once it launches from 2022.
Grab and Singtel first formed a consortium in December 2019 to apply for a digital bank licence. The former has a 60 per cent stake in the entity, while the latter holds a 40 per cent stake.
The consortium aims to formally launch the digital bank in early 2022.
According to Grab, the consortium will focus on serving consumers and small businesses, starting with time-starved young PMETs, gig workers with flexible incomes, and micro-SMEs who face limited access to financing.
Furthermore, the consortium aims to enable these underserved groups to easily access transparent financial services that are embedded in their everyday activities, helping them achieve a better quality of life.
Grab currently boasts a huge variety of lifestyle services — from food delivery to ride-hailing and insurance — in its quest to become a super app.
On the other hand, Singtel has a subscriber base of about 4.3 million as at June 2020.
Both companies are likely to cross-sell services and offer customised experiences, due to the breadth and depth of their customer relationships and data analytics.
Hence, it is reasonable to assume that customers of the Grab-Singtel digital bank will also receive perks in those areas.
Grab makes use of a tier system, where users a rewarded based on the number of points they chalk up.
At the top of the tier system is Platinum, with users requiring more than 4,500 points to qualify.
It is possible that users of the Grab-Singtel digital bank will be automatically accelerated to a Platinum status.
Some of the perks of becoming a Platinum customer includes an accelerated earn rate — Platinum users can earn twice the rewards points, translating into more rewards.
They can also enjoy prioritised bookings for rides, airport F&B discounts, and preferential airport lounge rates.
Singaporeans are no stranger to GrabFood, one of the largest food delivery services in the nation.
On the other hand, GrabMart allows users to purchase a wide variety of products from fresh produce to health and beauty products, and have them delivered to their doorsteps.
Since these two services are widely used by Singaporeans, the Grab-Singtel digital bank could offer preferred delivery rates to digital bank users to encourage them to come onboard.
Like its name suggests, GrabLoans allows users to borrow money from trusted bank partners. It is touted to be more affordable and flexible, and customers can also receive benefits when they apply for loans via Grab.
On the other hand, GrabInsurance offers travel insurance, and coverage for Grab rides.
Called Ride Cover, it is a programme that comprises of a personal accident insurance and a Pick-up Delay Voucher.
Since the Grab-Singtel digital bank is likely to have the personal information of its users, approval for loans and insurance can be quickly expedited.
GrabInvest is is a micro-investment solution to put one’s GrabPay balance to work as they spend on Grab.
When users make use of eligible Grab services, an additional amount of their choice is transferred from their GrabPay Wallet and invested on their behalf.
As a user of the Grab-Singtel digital bank, it is likely that the user’s interest will be automatically invested into GrabInvest.
Singtel is a multinational telecommunications conglomerate and one of the four major telcos operating in Singapore.
Furthermore, the telco has also been investing in areas such as cybersecurity, making Singtel well-poised to take on the digital banking venture.
Besides, it is likely to offer preferred rates on its mobile plans and early access to new products to its digital bank customers.
Besides mobile plans, Singtel also has a large variety of products ranging from broadbands to smart home solutions. These products could also possible be offered at preferred rates for its digital bank customers.
Consumer internet company Sea has a trio of digital services: gaming arm Garena, e-commerce platform Shopee, as well as SeaMoney, which focuses on digital financial services.
With already a slew of digital services at hand, moving into the digital bank area seems to be the next logical move for the tech company.
Moreover, pairing an e-wallet with an e-commerce platform is a tried-and-tested approach that worked for big names like Taobao and Alipay.
With a digital bank license however, Sea can offer so much more beyond just payments.
Sea has a huge customer base of millennials who uses its gaming and e-commerce services, and having a bank account with Sea will be convenient for them.
Shopee Coins are Shopee’s official virtual currency, and are credited to shoppers whenever they have successfully purchased items from Shopee Mall sellers.
When purchasing on the Shopee platform, shoppers will earn one Shopee coin for every S$1 spent. Coins can be used to offset future purchases, and every 100 coins entitle customers to a dollar off their purchase.
Besides acquiring these coins through purchases, customers can also play games via the app, or give reviews to gain more coins.
Users of Sea’s digital bank can expect to receive interest in the form of Shopee coins, or attain coins after carrying out transactions on its digital bank.
Garena is the online game developer and publisher arm of Sea. It distributes game titles on Garena+ in various countries across Southeast Asia and Taiwan.
Some of its game titles include League of Legends, and online soccer game FIFA Online 3.
Like many gaming platforms, players on Garena enjoy rewards in the form of in-game items or game currency.
Sea’s digital bank customers are likely to enjoy more rewards when using their account to make gaming-related purchases, or even as a form of cashback when spending.
Likewise, customers can possibly also expect rewards on Shopee in the form of discounted rates with selected merchants, or greater cashback opportunities.
The ease of selling on Shopee has lured more sellers to hawk their goods on the platform. Anyone can easily create a store on the Shopee marketplace with little hassle or difficulty.
Furthermore, according to a Shopee guide, store owners can start listing and selling products in just a few steps.
Shopee also awards some sellers with a “Preferred Shopee Seller” badge after analysing certain criteria such as the performance of the seller, customer feedback, reviews, and time taken to reply chats.
This helps to boost the credibility, which eventually leads to increased sales for sellers. Shopee sellers who are also users of Sea’s digital banks might be able to enjoy an acceleration towards becoming a Preferred Shopee Seller.
Furthermore, Shopee also routinely runs several in-app campaigns that aid sellers in increasing the exposure of their stores and products. For instance, “My Campaigns” was created for sellers to nominate their products to be featured on the main or category pages.
To have a product featured on these pages, sellers have to undergo a selection process. This process might be sped up for sellers who are users of Sea’s digital banks.
These customers might also enjoy preferred rates on Shopee’s “My Ads”, which allows their products to have more exposure on the platform.
The COVID-19 pandemic has led to the rise of remote working and social distancing, which has brought to the forefront the role of technology, data and contactless interactions.
From entertainment to purchasing necessities, digital tools have emerged as a way for many to lead their lives amid the pandemic.
This can also be said for banking, with a greater number of people going online to complete transactions.
As such, it makes it easier for digital banks to enter the market, as many have internalised the new normal of conducting daily activities online.
Since digital banks are entirely branchless, users do not have to head down to a physical bank to be in contact with anyone.
Besides ensuring safety, it is also a convenient option for many, especially millennials and Gen Z, who are well attuned to using digital services.
Moreover, as the sector is opened up to non-bank players such as Grab, Singtel and Sea, it will foster healthy competition, especially in the area of digital innovations.
This is likely to benefit Singapore’s consumers and businesses alike, and we can soon start to expect innovations in the banking industry.
Featured Image Credit: Reuters / Singtel / SEA
What Is A Digital Bank? Here’s What You Can Expect When It Launches In S’pore Starting 2022
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