South-east Asia's tech unicorns may look more like banks in the future

[SINGAPORE] A couple of years ago, banking would not have been the avenue people imagined South-east Asia's tech unicorns would take in pursuit of growth and sustainability.
Now, most of South-east Asia's tech unicorns have a bank of sorts under their belt – Grab has GXS Bank in Singapore, GX Bank in Malaysia and Superbank in Indonesia, while Sea has MariBank in Singapore and SeaBank in Indonesia and the Philippines. Sea also operates Ryt Bank as a joint venture with YTL Group.
Even GoTo has backed Bank Jago in Indonesia.
The banking sector is highly regulated, while tech startups, in contrast, often operate in regulatory grey areas where tech can disrupt current business models.
The inroads that these tech-owned banks have made into their markets have been remarkable. For instance, the total deposits for Grab's GXS and GX banks have grown from US$479 million in the first quarter of 2024 to US$1.3 billion in Q1 2025.
The three banks owned by Grab are projected to be collectively profitable by Q4 2026, according to Alex Hungate, chief operating officer of Grab. MariBank is also on track for profitability within the Monetary Authority of Singapore's digital bank licence framework of five years from launch.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Given these growth trends, there is potential for banking and financial services to make up the bulk of Sea and Grab's businesses. Currently, financial services make up 9.6 per cent of Grab's total revenue for Q1 2025, and 16.2 per cent of Sea's Q1 2025 revenue.
These numbers can quickly multiply, as Grab and Sea ramp up their banking operations in emerging markets such as Indonesia.
Almost half of all adults in that country are unbanked or underbanked, and about 36 million adults remain unbanked in the Philippines.
Running their banks as digital banks has helped to cut costs in serving unbanked and underbanked customers. Technology is making risk management processes such as know-your-customer and credit modelling – in an environment where information is not readily available – cheaper compared with traditional banks.
The opportunities in South-east Asia also include the many micro, small and medium-sized enterprises (MSMEs) that Grab and Sea's banks serve. Traditional banks incur high costs to serve this segment of business customers.
Meanwhile, the new digital banks by Grab and Sea have also utilised technology to serve their retail customers, thus bringing costs down.
It also helps that some of the MSME customers are also Grab or Sea merchants, allowing their banks to access data that traditional banks would not be privy to. The number of orders on Grab's food-delivery platform and Sea's Shopee platform gives the tech unicorns an edge in understanding these customers' monthly cash flow and business performance.
Rising interest rates in the last few years have also allowed digital banks to make money off deposits. Coupled with this edge that Grab and Sea have over traditional banks, the foundation has been laid for their banking businesses to potentially overtake the original business units in terms of revenue.
Grab's mobility and food-delivery businesses are highly dependent on the human factor, given the involvement of drivers, riders and food merchants. Similarly, Sea's Shopee business is equally dependent on merchants being willing to continue to sell on the platform.
This is a factor that both Grab and Sea have less control over; they can influence such actors with incentives and subsidies, but this may result in inefficiencies.
In conventional banking, once a customer is acquired, there is a level of stickiness that comes with participating in financial services transactions. This is unlike customers of delivery and ride-hailing services, who are driven by the lowest price, or with the riders, who may jump ship once the commission percentage changes. Grab and Sea would also wield more control over the supply side of the equation, compared with ride-hailing or e-commerce.
With these factors in mind, it will pay to watch this space, to see if the next incarnation of Grab and Sea will be as banks rather than tech players.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Business Times

an hour ago

• Business Times

Trump pledge of quick China magnet flows has yet to materialise

[HONG KONG] Almost 10 days since US President Donald Trump declared a 'done' trade deal with Beijing, US companies remain largely in the dark on when they will receive crucial magnets from China, and whether Washington, in turn, will allow a host of other exports to resume. While there has been a trickle of required permits, many American firms that need Chinese minerals are still waiting on Beijing's approval for shipments, according to sources familiar with the process. China's system is improving but remains cumbersome, they said, contrary to Trump's assurances rare earths would flow 'up front' after a Jun 11 accord struck in London. The delays are holding an array of American industries hostage to the rocky US-China relationship, as some firms wait for magnets and others face restrictions son elling to China. That friction risks derailing a fragile tariff truce clinched by Washington and Beijing in Geneva last month, and triggering fresh rounds of retaliation. Interviews with multiple Western buyers, industry insiders and officials familiar with discussions revealed frustration over vague policies in both countries and lingering confusion about what level of magnet approvals from China would trigger Trump to abandon his tit-for-tat export curbs. 'Even if export approvals accelerate, there are so many unknowns about the licensing regime that it's impossible for companies to have a strong sense of certainty about future supply,' said Christopher Beddor, deputy China research director at Gavekal Research. 'At a minimum, they need to factor in a real possibility that talks could break down again, and exports will be halted.' In response to China's sluggishness on magnets, Trump last month restricted US firms from exporting chip software, jet engines and a key ingredient to make plastic to China until President Xi Jinping restores rare-earth exports. Companies subject to Washington's curbs have halted billions of US dollars in planned shipments as they wait for players in unrelated sectors to secure permits from Beijing, which could take weeks or even months to process, given the current pace. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Corporate chiefs affected by the export-control spat have sought clarity from the administration on its strategy, according to sources familiar with the matter. The Commerce Department, which administers the rules, has offered few details, they added. Oil industry executives have tried to convince Trump officials that blocking exports of ethane – a gas used to make plastics – is contrary to US national security interests, according to sources familiar with the deliberations. Business leaders have asked for export restrictions to be removed but that's been unsuccessful so far, the sources said. Energy and chemical giant INEOS Group Holdings has one tanker full of ethane waiting to go, while Enterprise Products Partners has three to four cargo ships stuck in limbo, according to a source familiar with the matter. That's particularly galling because China has adequate ethane supplies in reserve and can switch to using naphtha from the Middle East and other regions for much of their production, the sources said. Representatives from the companies did not respond to requests for comment. Industry figures have consistently told the Trump administration the ethane export restrictions are inflicting more pain on US interests than on China, according to the sources. China's Ministry of Commerce, which administers export licenses, has not responded to Bloomberg's questions on how many for rare earths have been granted since the London talks. At a regular briefing in Beijing on Thursday, spokesperson He Yadong said Beijing was 'accelerating' its process and had given the go-ahead to a 'certain number of compliant applications'. Access to rare earths is an issue 'that is going to continue to metastasise until there is resolution,' said Adam Johnson, chief executive officer of Principal Mineral, which invests in US mineral supply chains for industrial defence. 'This is just a spigot that can be turned on and off by China.' China only agreed to grant licenses, if at all, for six months, before companies need to reapply for approvals. Firms doing business in the US and China could see recurring interruptions, unless the Commerce Ministry significantly increases its pace of process applications. Adding an extra layer of jeopardy for US companies, Chinese suppliers to America's military-industrial base are unlikely to get any magnet permits. After Trump imposed sky-high tariffs in April, Beijing put samarium – a metal essential for weapons such as guided missiles, smart bombs and fighter jets – on a dual-use list that specifically prohibits its shipment for military use. Denying such permits could cause ties to further spiral if Trump believes those actions violate the agreement, the terms of which were never publicised in writing by either side. That sticking point went unresolved during roughly 20 hours of negotiations last week in the UK capital, sources familiar with the details said. Complicating the issue, companies often buy magnets from third-party suppliers, which serve both defence and auto firms, according to a person familiar with the matter. That creates a high burden to prove to Chinese authorities a shipment's final destination is a motor not a missile, the source added. Beijing still has not officially spelt out the deal's requirements, nor has Xi publicly signalled his endorsement of it – a step Trump said was necessary. 'The Geneva and London talks made solid progress towards negotiating an eventual comprehensive trade deal with China,' White House spokesperson Kush Desai said. 'The administration continues to monitor China's compliance with the agreement reached at Geneva.' China's Commerce Ministry is working to facilitate more approvals even as it asks for reams of information on how the materials will be used, according to sources familiar with the process. In some cases, companies have been asked to supply data including detailed product designs, one of the sources said. Morris Hammer, who leads the US rare-earth magnet business for South Korean steelmaker Posco Holdings, said Chinese officials have expedited shipments for some major US and European automakers since Trump announced the agreement. China's Advanced Technology & Materials said on Wednesday it had obtained permits for some magnet orders, without specifying for which destinations. The company's customers include European aerospace giant Airbus SE, according to data compiled by Bloomberg. Around half of US suppliers to Toyota Motor, for example, have had export licenses granted, the company said – but they're still waiting for those materials to actually be delivered. It's likely some of the delays are transport-related, one of the sources said. Even with permits coming online, rare-earth materials are still scarce because overseas shipments were halted for two months starting in April, depleting inventories. Trump's agreement 'will allow for rare earths to flow out of the country for a short period of time, but it's not helping the auto industry because they are still talking shutdowns', Hammer said. 'Nobody trusts that this thaw is going to last.' For many automakers, the situation remains unpredictable, forcing some to hunt for alternatives to Chinese supplies. Two days after Trump touted a finalised trade accord in London, Ford Motor chief executive officer Jim Farley described a 'day-to-day' dynamic around rare-earths licenses – which have already forced the company to temporarily shutter one plant. General Motors has emphasised it's on firmer footing in the longer term, because it invested in domestic magnet making back in 2021. The automaker has an exclusive deal to get the products from MP Materials in Texas, with production starting later in the year. It has another deal with eVAC of Germany to get magnets from a South Carolina plant starting in 2026. In the meantime, GM and its suppliers have applied for permits to get magnets from China, a source familiar with the matter said. Scott Keogh, the CEO of Scout Motors – the upstart EV brand of Volkswagen – told Bloomberg Television his company is re-engineering brakes and drive units to reduce the need for rare earths. Scout is building a plant in South Carolina to make fully electric and hybrid SUVs as well as trucks starting in 2027. Until the rare-earth supply line is reopened to Washington's satisfaction, Trump has indicated that the US is likely to keep in place its own export restrictions. Senior US officials have suggested the curbs are about building and using leverage, rather than their official justification: national security. Commerce Secretary Howard Lutnick said the measures were used to 'annoy' China into complying with a deal US negotiators thought they'd already reached. Restrictions on sales to China of electronic design automation (EDA) software for chipmaking are emblematic of the standoff. Those EDA tools are used to design everything, from the highest-end processors for the likes of Nvidia and Apple to simple parts, such as power-regulation components. Fully limiting China's access to the best software, made by a trio of Western firms, has been a longtime priority in some Washington national security circles – and would build on years of US measures targeting China's semiconductor prowess. While some senior Trump officials specifically indicated the administration would relax some semiconductor-related curbs if Beijing relents on rare earths, EDA companies still lack details on when, and whether, their China access will be restored, said industry officials who requested anonymity to speak candidly. Even if that happens, there's a worry that heightened geopolitical risks will push Chinese customers to hunt for other suppliers or further develop domestic capabilities. 'The risk is there for the London deal to fall apart,' said Alicia Garcia Herrero, chief economist for Asia-Pacific at Natixis. 'Because rare earths is a very granular issue and mistakes can be made.' BLOOMBERG

Straits Times

an hour ago

• Straits Times

US may target Samsung, Hynix, TSMC operations in China, sources say

In 2023 and 2024, the companies received what is known as Validated End User status in order to continue the trade. PHOTOS: AFP, REUTERS SAN FRANCISCO - The US Department of Commerce is considering revoking authorisations granted in recent years to global chipmakers Samsung, SK Hynix and TSMC, making it more difficult for them to receive US goods and technology at their plants in China, according to people familiar with the matter. The chances of the United States withdrawing the authorisations are unclear. But with such a move, it would be harder for foreign chipmakers to operate in China, where they produce semiconductors used in a wide range of industries. A White House official said the United States was 'just laying the groundwork' in case the truce reached between the two countries fell apart. But the official expressed confidence that the trade agreement would go forward and that rare earths would flow from China, as agreed. 'There is currently no intention of deploying this tactic,' the official said. 'It's another tool we want in our toolbox in case either this agreement falls through or any other catalyst throws a wrench in bilateral relations.' Shares of US chip equipment makers that supply plants in China fell when the Wall Street Journal first reported the news earlier on June 20. KLA Corp dropped 2.4 per cent, Lam Research fell 1.9 per cent and Applied Materials sank 2 per cent. Shares of Micron, a major competitor to Samsung and SK Hynix in the memory chip sector, rose 1.5 per cent. A TSMC spokesman declined comment. Samsung and Hynix did not immediately respond to requests for comment. Lam Research, KLA and Applied Materials did not immediately respond, either. In October 2022, after the United States placed sweeping restrictions on US chipmaking equipment to China, it gave foreign manufacturers like Samsung and Hynix letters authorising them to receive goods. In 2023 and 2024, the companies received what is known as Validated End User status in order to continue the trade. A company with VEU status is able to receive designated goods from a US company without the supplier obtaining multiple export licenses to ship to them. VEU status enables entities to receive US-controlled products and technologies 'more easily, quickly and reliably,' as the Commerce Department website puts it. The VEU authorisations come with conditions, a person familiar with the matter said, including prohibitions on certain equipment and reporting requirements. 'Chipmakers will still be able to operate in China,' a Commerce Department spokesperson said in a statement when asked about the possible revocations. 'The new enforcement mechanisms on chips mirror licensing requirements that apply to other semiconductor companies that export to China and ensure the United States has an equal and reciprocal process.' Industry sources said that if it became more difficult for US semiconductor equipment companies to ship to foreign multinationals, it would only help domestic Chinese competitors. 'It's a gift,' one said. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.

AsiaOne

2 hours ago

• AsiaOne

Japan scraps US meeting after Washington demands more defense spending, World News

WASHINGTON - Japan has cancelled a regular high-level meeting with its key ally the United States after the Trump administration demanded it spend more on defence, the Financial Times reported on Friday (June 20). Secretary of State Marco Rubio and Defence Secretary Pete Hegseth had been expected to meet Foreign Minister Takeshi Iwaya and Defence Minister Gen Nakatani in Washington on July 1 for the annual 2+2 security talks. But Tokyo scrapped the meeting after the US asked Japan to boost defence spending to 3.5 per cent of gross domestic product, higher than an earlier request of 3 per cent, the newspaper said, citing unnamed sources familiar with the matter. Japan's Nikkei newspaper reported on Saturday that President Donald Trump's government was demanding that its Asian allies, including Japan, spend 5 per cent of GDP on defence. A US official who asked not to be identified told Reuters that Japan had "postponed" the talks in a decision made several weeks ago. The official did not cite a reason. A non-government source familiar with the issue said he had also heard Japan had pulled out of the meeting but not the reason for it doing so. State Department spokesperson Tammy Bruce said she had no comment on the FT report when asked about it at regular briefing. The Pentagon also had no immediate comment. Japan's embassy in Washington did not respond to a request for comment. The nation's foreign and defence ministries and the Prime Minister's Office did not answer phone calls seeking comment outside business hours on Saturday. [[nid:715497]] The FT said the higher spending demand was made in recent weeks by Elbridge Colby, the third-most senior Pentagon official, who has also recently upset another key US ally in the Indo-Pacific by launching a review of a project to provide Australia with nuclear-powered submarines. In March, Prime Minister Shigeru Ishiba said that other nations do not decide Japan's defence budget after Colby, in his nomination hearing to be under secretary of defence for policy, called for Tokyo to spend more to counter China. Japan and other US allies have been engaged in difficult trade talks with the United States over President Donald Trump's worldwide tariff offensive. The FT said the decision to cancel the July 1 meeting was also related to Japan's July 20 upper house elections, expected to be a major test for Ishiba's minority coalition government. Japan's move on the 2+2 comes ahead of a meeting of the US-led Nato alliance in Europe next week, at which Trump is expected to press his demand that European allies boost their defence spending to 5 per cent of GDP.