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Singtel gets a crack at the banking business

The doors of digital finance have swung wide open for Singtel with the granting of a full banking license to the telco and its partner, Grab, a local food delivery and payments company.

"The opportunity to build a digital bank comes during a critical time when more people and businesses are going online, along with research showing that 40% of Singapore residents are underbanked," Singtel and Grab said in a statement.

They said their digital bank would focus on consumers, "time-starved young" professionals, gig workers and small businesses, especially those with limited access to financing.

Another Singapore tech firm, Sea, was issued a full license. Two other consortia, including one backed by Jack Ma's Ant Group, were granted wholesale licenses.

Singtel's stock rose 4.2% in Monday trading following the announcement.

Many telcos already offer some kind of mobile payments solution, but so far only a few, such as Orange, have been given the chance to become a full-fledged bank.

Interestingly, a Light Reading reader survey at the start of the year concluded overwhelmingly that telcos should not get involved in banking.

But that's not where the industry is going.

For one thing, telcos are appealing partners to banks – at least, up to a point. That's especially true in developing markets, where as much as 80% of the population lack access to banking services or a credit profile, but many have a mobile phone.

Most famously, the GSMA's mobile money initiative has provided access to a payment system for millions of people in Africa, Asia and Latin America. It now operates in 90 countries and has 372 million active accounts.


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In advanced economies like Singapore, banks are failing to win over young customers and face a rising threat from fintech and digital banks.

Some banks have responded by creating their own digital banks, which have the advantage of a lower cost base and being easily accessible to mobile users.

Telcos have some of their own strengths: a large customer base, big data capabilities and the existing ability to offer multiple services, including payments and transactions.

Some of these payment or card services are becoming an important secondary revenue stream for Asian operators.

NTT DoCoMo handled 3.2 trillion yen ($30.7 billion) in transactions in the first half of 2020. Of that sum, JPY332 billion ($3.2 billion) was made through its dpayment platform, which has accumulated 30 million users.

But we are still seeing some banks and telcos partnering up. In Hong Kong, PCCW-HKT has just co-founded a virtual bank along with Standard Chartered Bank and online travel firm Trip.com – one of eight new virtual players.

The bank, Mox, officially launched in September, offering daily interest rates, easy integration with other bank accounts and support for both Apple Pay and Google Pay.

In sum, there's no shortage of telco opportunities from the disruption sweeping the financial sector.

— Robert Clark, contributing editor, special to Light Reading

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