South-east Asian ride-sharing company Grab is to extend its move into FinTech and payments by applying for one of five digital banking licences that are being issued in Singapore, where it is headquartered.

Grab is embarking on a joint venture with local telecoms provider Singtel, targeting SMEs and ‘digital first’ consumers.

Founded in Malaysia just eight years ago, the company is already valued at over $14 billion and is backed to the tune of $7 billion by a number of Asian investors, including Japanese technology conglomerate SoftBank and the Chinese sovereign wealth fund.

“The core of Grab’s mission has always been to solve everyday challenges and unlock economic potential in south-east Asia,” said Reuben Lai, senior Managing Director of Grab’s financial services division, in an FT report.

Grab is not the only ride-sharing business to be planning a move into digital finance, beyond providing a financial back end to its drivers. Last October, Uber – which partners with Grab in Asia – launched Uber Money as a mobile banking platform for its drivers and couriers, a service that is likely to be extended to users in the near future.

The opportunity is certainly there. In November 2019, Transform Finance reported that long-established banking names are beginning to lose ground to challenger banks and FinTech startups.

More than one in ten consumers (11 percent) exclusively use challenger banks instead of established high-street names, and in five years’ time, less than half of them will solely bank with traditional brands.

Those were just two of the headlines in a report, Technology and the New Banking Customer – European View, from electronics and enterprise systems giant, Fujitsu.

Of particular note was the finding that new consumers choose digital services in preference to high street names when they enter the market – a trend that should alarm incumbent banks, but which spells opportunity for Grab, Uber, and others.

That said, the window may be closing, as other recent reports have suggested that the FinTech space is fast consolidating, with funding coalescing around more established and well-capitalised market entrants rather than fresh startups (see Transform Finance, passim).

With their broad VC backing, unicorn valuations, brand familiarity, and disruptive bridgeheads in other markets, the likes of Uber and Grab could make a sideways move into consumer and small business finance, given their need to supply reliable financial back ends to their own drivers.

However, for consumers the watchwords will be trust and transparency – areas where ride-sharing giants’ aggressive expansion and perceived cowboy tactics in the on-demand transport space may not play well.

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