Grab, Razer must prove profitability to win new Singapore digital banking licences

Singapore’s Monetary Authority is offering five virtual banking licences as part of a strategy to strengthen competition

Grab and Razer have expressed interest in bidding, but the loss-making tech firms will have to prove they can generate profits

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Grab is one of the tech companies that have expressed an interest in submitting a bid for one of the five virtual banking licences on offer in Singapore. Photo: Reuters

Published: 3:00pm, 18 Dec 2019Updated: 12:58pm, 19 Dec 2019

Grab Holdings and gaming company Razer will need to demonstrate how their millions of users can help them generate profits if the two technology firms are to win one of Singapore’s coveted virtual banking licences.

That is because the Monetary Authority of Singapore (MAS) is putting more emphasis on profitability and strong capital requirements than some other regulators inviting fintech firms into banking. Both Grab and Razer have expressed interest in submitting separate bids for one of the five digital banking licences on offer, part of a government strategy announced earlier this year to strengthen competition in financial services.

“The Singapore requirements on digital banks will mean that profitability will have to be a key consideration” for potential applicants, said Zennon Kapron, managing director of Singapore-based consulting firm Kapronasia. To succeed “they will need to achieve scale very quickly”, he said.

The Monetary Authority of Singapore building in Singapore. Photo: Reuters

That is a particular challenge for Grab and Razer, two of the highest profile technology firms interested in the licences. Razer and Grab’s Singapore ride-hailing unit have consistently reported losses in recent years.

In its guidelines, the MAS said financial projections that show a consistent or increasing trend in net losses will not meet its requirement of demonstrating “a path to profitability”. It said it may favourably consider any applicant whose financial projections show an earlier break-even year.