The five chosen digital banking licence applicants are...

KUALA LUMPUR – After months of waiting, the five selected digital banking licence applicants are finally revealed by Bank Negara Malaysia (BNM).

Out of 29 total applications, BNM announced three consortia licensed under the Financial Services Act 2013 (FSA) which are Boost Holdings Bhd and RHB Bank Bhd; GXS Bank Pte Ltd and Kuok Brothers Sdn Bhd; and Sea Ltd and YTL Digital Capital Sdn Bhd.

Meanwhile, the other two consortia are licensed under the Islamic Financial Services Act 2013 (IFSA) namely the AEON Financial Credit Service Co Ltd, Aeon Credit Service (M) Bhd and Moneylion Inc; as well as the consortium led by KAF Investment Bank Sdn Bhd.

According to BNM, three out of the five consortia are majority-owned by Malaysians, naming the Boost Holdings and RHB Bank; Sea Ltd and YTL Digital Capital and also KAF Investment Bank in a recently released statement.

Moving forward, BNM explained that the chosen five digital banking licence consortia are required to complete their operational readiness phase that will be certified by the central bank via audit before they are able to fully begin their operations.

The exercise is expected to take between 12 to 24 months to complete.

Also in the statement, BNM’s Governor Tan Sri Nor Shamsiah Mohd Yunus said that digital banks are expected to further advance financial inclusion.

She stated that the digital banking licence would allow for society to participate in economic activities through the adoption of digital technology for everyday transactions.

Additionally, digital banks allow for geographical barriers to be removed while at the same time lower transaction costs and foster better financial management, she explained.

Furthermore, digital banks enable entrepreneurs and businesses to have better access to targeted solutions which are backed by data analytics.

“As businesses transition to online markets, digital banking also offers a safer and more convenient way to transact,” she added.

The statement further explains that the 29 applicants of the digital banking licence were extensively evaluated in accordance with the required Section 10 (1) of the FSA and IFSA1. This means that BNM had to examine all the factors in Schedule 5 of the Acts as well as adhere to other relevant policy requirements.

The criteria of assessment takes into account applicants’ character and integrity, the nature and sufficiency of their financial resources, the soundness and feasibility of their business and technological strategies, and also their ability to meaningfully address issues of financial inclusion.

BNM also stated that the applicants were evaluated on their individual merits and compared to other applicants using the standard evaluations of each assessment criteria.

Aside from that, this horizontal evaluation is based on the assessment criteria given to all the digital banking licence applicants to ascertain each of their relative strengths and to identify successful applicants.

The central bank remarked that it conducted four stages of assessments which were supported by a cross-functional technical team, a review team, and internal independent observers from BNM’s risk and legal departments.

After the process, the final recommendations were then brought up to the Finance Minister, Tengku Datuk Seri Zafrul Abdul Aziz, with the endorsement of BNM’s Management Committee.

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