Grab-Singtel group puts cybersecurity at top of digital bank agenda

Singapore

GRAB and Singtel's consortium is making cybersecurity a top priority for their digital bank. This comes as the new entity faces increasing expectations to prove to regulators and consumers over the next year that its cybersecurity defences are robust enough.

In an interview with The Business Times, Grab Financial Group's senior managing director Reuben Lai said cybersecurity is a critical aspect of the digital banking business. "We've had a few moments where we had issues with data leakage, and those were moments where we worked with the regulator and put in new processes," he said.

Grab was fined S$10,000 in July this year by Singapore's privacy watchdog after it compromised the safety of its users' data. It was the fourth time that the company breached data privacy regulations.

"Part of why we worked with Singtel is because of their expertise, given that they own Trustwave, a renowned cybersecurity firm," said Mr Lai.

Charles Wong, former head of Citibank Singapore's retail banking who now heads the Grab-Singtel digital bank, said the bank will be held to high safety standards.

"Cybersecurity will be one of the top, if not the top priority, for the bank," Mr Wong told BT on Friday after the Monetary Authority of Singapore (MAS) announced the winners of the digital banking licences.

Data governance is another key area the bank is focusing on, he added. As part of its efforts to build a robust banking infrastructure, the bank will hire around 200 staff in Singapore by the end of next year in areas of product, data, technology, risk, finance and compliance.

To date, 10-15 per cent of the roles, including in key areas such as cyber security, data and product, have been filled.

Cybersecurity and data protection were among the stringent requirements MAS considered in its assessment of 21 digital bank applications.

MAS managing director Ravi Menon told BT in a recent podcast interview that the central bank is looking to hold these new digital banks to the same, high standards in cybersecurity and technology risk management as traditional banks.

"There cannot be a compromise on that," he said.

Grab-Singtel's digital bank will focus on serving consumers and small businesses. It will first target young PMETs (professional, manager, executive and technician), flexible-income gig workers, as well as micro-small and medium enterprises.

Mr Wong said the consortium is paying special attention to credit risk management, given the volatile Covid-19 environment and the digital bank's infancy. He is confident Grab and Singtel together have the data the bank needs to understand the behaviour of consumers and SMEs.

The digital bank, as a subsidiary of Grab Financial Group, is meant to be a "complementary" player in both Grab and Singtel's ecosystems.

For instance, if Grab distributes a product from the digital bank on its platform, it does not derive a fee from it, said Mr Lai.

Arthur Lang, Singtel's CEO of International, said the digital bank is regarded as an "additional distribution channel" for financial services products and that there are arrangements to manage any potential conflicts of interest.

This comes as observers have pointed out that while the digital banks are subjected to the stringent regulations imposed by MAS, their parent companies are not.

Hagen Rooke, counsel at law firm Reed Smith in alliance with Resource Law, told BT: "The main potential conflict is that Grab group's distribution channels may be skewed towards the bank, whereby it might recommend or more prominently advertise its products.

"In reality however, this is less likely to represent a conflict of interest and more of concentration of market power for Grab."

If managed well, having separate entities working with differentiated focus would generate synergies that could amplify the value of each product, said Forrester analyst Meng Liu.

Grab's Mr Lai declined to comment on talk of the company potentially merging with Gojek, and how that may impact the digital bank.

But bagging the the digital bank licence makes Grab's position even stronger, said Vincent Fernando, founder of tech-focused research and corporate finance firm Zero One Partners. It could also boost its valuation if the ride-hailing giant decides to publicly list.

"Grab already had a decent story, but coupled with the potential to be a digital bank - that is the type of thing that can really get the market excited," he said.

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