With the recent announcements of the consortia receiving the digital bank licences from Bank Negara Malaysia (BNM), the winners are ramping up their activity for their auditing process.
BNM had announced the five consortia receiving the digital licence which are Boost Holdings Bhd and RHB Bank Bhd; GXS Bank Pte Ltd and Kuok Brothers Sdn Bhd; Sea Ltd and YTL Digital Capital Sdn Bhd; 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.
The consortia are licensed under the Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA).
However, these five consortia must undergo an operational readiness phase that will be certified by BNM via audit before they are able to fully begin their operations, a process that the central bank believes should take about 12 to 24 months.
Before these digital banks are fully operational, here are some of the points they have talked about that would likely indicate parts of what they would offer in the future.
Providing financial inclusion to the underserved
Even prior to being selected, the Boost-RHB consortium had been gearing up for digital banking through Boost’s campaign known as Boost Credit where the fintech arm of Axiata Group Bhd (Axiata) had created a sizable digitally engaged core customer base. The enterprise uses data-driven insights to tread new ground where they develop solutions to address the issues faced by the underserved market particularly the micro and small medium enterprises (MSMEs and SMEs).
Boost partnered with RHB in a 60-40% stake consortium with the aim that the digital bank would create better access for digital financial inclusion amongst the underserved.
RHB, being one of the major banks in Malaysia, already has the customer base to which they would leverage their Agile@Scale model to accelerate delivery as efficiently, comparing it to their offerings like the RHB MyHome app, RHB SME e-Solutions and SME Online Financing.
Axiata president and group CEO as well as chairman of Boost, Dato’ Izzaddin Idris, said in a statement that securing the digital licence in Malaysia would enable financial inclusion for the MSMEs and SMEs, which he believes is needed to support the country’s economic recovery.
It is also in the statement that Boost had highlighted their MoU with the Credit Guarantee Corporation Malaysia which emphasises on two key parts, both of which would allow more financing solutions for the MSMEs.
Lest we forget gig economy workers
GXS Bank is made up of Grab Holdings Limited partnering with Singtel where together with Kuok Brothers Sdn Bhd, they had formed a consortium to apply for a digital bank licence from BNM. Kuok Brothers is a company founded by Robert Kuok, also known as Malaysia’s richest man.
Grab had released a statement recently, that the consortium has appointed a new CEO designate, Lai Pei Si, who will lead this digital banking venture. With 25 years experience under her belt, Lai is tasked to assemble a team of over 200 roles which includes areas of product and design, data, technology, risk and compliance.
Along with catering to MSMEs and SMEs, the statement also talked about including gig workers and allowing them access for financial services.
Just in March this year, Grab Financing Group had collaborated with SEDANIA As Salam Capital Sdn Bhd (SASC) to offer Grab drivers and delivery partners financing options to help these gig workers requiring micro-financing.
Although the statement did not elaborate on the options to come for gig workers, it is quite likely that this consortium would allow gig workers to receive the much needed financial support once the digital bank is fully operational.
The statement also mentioned that GXS is vying for 55.45% stake in the upcoming digital bank although BNM had previously explained in their digital banking licence framework that they would prefer majority of the equity to be held by Malaysians.
Financial solutions for consumers?
Sea Ltd is the parent company of one of Malaysia’s largest online shopping platforms, Shopee. YTL Group is a conglomerate with businesses in different sectors like hotels, property, technology and more.
When combined, it is safe to say that this consortium has a large consumer base within Malaysia and the Southeast Asia region although YTL does have operations in other countries like the United Kingdom, Australia, France, Japan, Jordan and the Netherlands.
Compared to the others, this particular consortium is one which connects mainly to end users like customers buying products on Shopee, visitors to hotels owned by YTL or even home buyers from YTL development projects. It is possible that their digital bank would allow more financing options for end users a.k.a the general public.
Although there hasn’t been any comments from the consortium yet to date, we can keep an eye out to see what they have to offer.
Partnering with a US company
The tripartite collaboration between AEON Credit Service (M) Bhd, AEON Financial Service Co. Ltd (AFS) and Moneylion Inc. (MU) resulted in a consortium which was among the two recipients of the digital bank licence under the IFSA.
According to Bernama, the digital bank’s equity will be divided by 45:45:10 with AEON Credit and AFS vying for 45% each.
MU is an established US company which offers a full-service digital platform for investments and personalised solutions for middle class Americans and they would be acting as the tech advisors offering AI solutions and data analytics for the digital bank.
AEON Credit has been well known in Malaysia offering micro financing options for customers and it is quite likely that this consortium will offer similar but, hopefully, better options for the public. It could be possible that they would incorporate more financing solutions in their malls as it could be a win-win situation for them and the customers who are shopping.
Also in the Bernama report, it stated that AEON is expecting to be fully operational within 24 months although they did not reveal much details as of date.
Investment solutions?
The last on the list is the KAF-led consortium. KAF is an investment bank with financial services in different activities that include money market activities, investment banking, stock broking, Islamic banking, research, investment fund management, fund advisory and trustee services.
Their fintech startup under the consortium is MoneyMatch, which Bernama reports its CEO, Adrian Yap saying the consortium has allocated resources for the underserved MSMEs market. MoneyMatch offers cross-border trade payments and individual remittances which, as at October 2021, had more than RM2.5 billion in transaction volume.
Although no further details were mentioned, the matchup between KAF and MoneyMatch could possibly mean that it would enable more cross-border investment options.
At this point of time, we might not yet know what these digital banks would offer as it is just speculation. Only time will tell if these speculations would be proven.
However, the certainty here is that these digital banks would allow for better financial inclusion especially among those underserved like the MSMEs and SMEs, as well as gig workers.
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