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Grab Holdings and Singaporean telco Singtel have announced that their digital bank joint venture, GXS Bank, has been selected to receive a full digital banking licence in Malaysia.
Subject to regulatory approvals from Bank Negara Malaysia, the country's central bank, the joint venture will hold a 55.45 percent stake in the proposed digital bank, alongside a consortium of investors that includes the Kuok Brothers.
In a press statement, Grab said the digital bank aims to fill 200 roles ahead of launch, covering areas such as product and design, data, technology, risk and compliance.
Grab’s digital bank offering will aim to provide access to financial services for micro businesses and other financially underserved demographics, such as gig economy workers.
In particular, Grab expects that small and medium-sized enterprises (SMEs) will be the key beneficiaries of the digital bank.
As Grab pointed out, SMEs form the backbone of the Malaysian economy. In 2021, according to the Malaysia Statistical Business Register (MSBR), SMEs made up more than 97 percent of all businesses in the country.
In 2020, SMEs employed almost half (48 percent) of the nation’s workforce, and accounted for 38 percent of Malaysia’s GDP.
Grab’s digital banking launch will not be without competition, however, as Bank Negara Malaysia also announced the issuance of four other licences on the same day.
Under the Financial Services Act 2013 (FSA), a consortium of Boost Holdings and RHB Bank Berhad, and another led by Sea Limited and YTL Digital Capital, will also receive licences.
Under the Islamic Financial Services Act 2013 (IFSA), a consortium of AEON Financial Service, AEON Credit Service (M) Berhad and MoneyLion Inc, and another led by KAF Investment Bank, will receive licences.
In a statement, the central bank added that three out of the five consortiums are majority-owned by Malaysians, namely Boost Holdings and RHB Bank Berhad, Sea Limited and YTL Digital Capital, and KAF Investment Bank.
Building a regional banking behemoth
The news of Grab’s licence acquisition in Malaysia comes almost 18 months after the ride-hailing giant was granted a similar licence in Singapore, and is further evidence of the growing interest from non-financial services firms in fintech.
Grab first made this step back in 2017 when it announced that its ride-hailing app would expand to become a full service payments app, allowing a wide range of merchants to accept payments in its home market of Singapore. It has since also added a range of pay later services.
In December 2020, Grab-Singtel was selected for a full digital banking licence, after forming a joint venture a year earlier. Grab holds a 60 percent stake and the venture aims to formally launch its digital bank in 2022.
As in Malaysia, Grab said its digital banking offering in Singapore will focus on serving gig workers and SMEs, in addition to professionals, managers, executives and technicians.
Grab indicated that it plans to combine its Singapore and Malaysian digital banking licences to create a regional digital banking proposition.
Arthur Lang, group chief financial officer at Singtel and board member of the GXS Bank joint venture, said: “We are glad to have this opportunity to support Malaysia’s vision of greater financial inclusion for its people.
“We aim to spur fintech innovation that will transform the banking experience, making financial services more accessible, relevant and affordable.”
