Among the five remaining candidates for a Singapore DFB, only Tencent-backed Sea brings as many strong fundamentals to the table as Grab-Singtel. Indeed, Sea, Singapore's most valuable listed firm, arguably has an even stronger digital services ecosystem in place, including e-commerce, gaming and digibanking.
The main caveat for the Grab-Singtel venture is Grab's balance sheet. In its eight years of operation, the ride-hailing giant has not posted a profit, and applicants must persuade Singaporean regulators that they have sustainable business models. Grab will almost certainly lose money again this year, although revenue in the third quarter reportedly reached roughly 95% of pre-pandemic levels on the back of surging demand for food delivery, Grab said in a newsletter.
Another issue for Grab is its history of user data breaches. The company has been fined four times in two years for such violations. Most recently, in September, Singapore's Personal Data Protection Commission (PDPC) fined Grab S$10,000 for failing to secure personal details of drivers and passengers on its mobile app.
"Given that (Grab's) business involves processing large volumes of personal data on a daily basis, this is a significant cause for concern," PDPC deputy commissioner Yeong Zee Kin said in a statement.
With that in mind, Grab would likely have to rely on the reputation of state-backed Singtel to assuage any concerns - from customers or regulators - about the ride-hailing firm's ability to safeguard sensitive financial user data.
Still, some observers are bullish on the prospects of a Grab-Singtel digital bank. DBS estimates the joint venture could attract 150,000 to 200,000 customers over three to five years, drawing on both Grab's user base (drivers) and partners, such as hawkers. The digibank could offer them credit solutions and unsecured loans.
DBS estimates that Singtel may need to commit more than US$440 million to its digital banking venture with Grab. That is a hefty sum, but the Singapore telecoms giant is eager to access opportunities in digital banking.