SINGAPORE, 1 JULY: According to people familiar with the situation, Grab, a Southeast Asian ride-hailing to fintech company, and AirAsia, a cheap airline, are among more than a dozen bidders bidding for digital banking licenses in Malaysia. Telecoms provider Axiata and a consortium backed by Chinese tech firm Tencent were among those who submitted proposals by Wednesday’s deadline, according to the sources.
They were enticed by the prospect of a burgeoning army of youthful smartphone users in a country with a population of more than 32 million people and relatively low financial entrance obstacles.
Malaysia’s decision to open up its banking sector comes at a time when Asian markets like Hong Kong, Singapore, and the Philippines are welcoming new competitors, largely fintech firms, who are challenging incumbents with low-cost and novel offerings.
Malaysia’s central bank has stated that up to five licenses will be issued by early 2022.
“With a huge population, high smartphone penetration, and a young population willing to try out new services, Malaysia offers many of the features digital banking players are looking for,” said Shankar Kanabiran, financial services consultancy partner at EY.
Fintechs, money remittance businesses, and co-operatives representing the banking and housing industries have expressed interest in Malaysia’s digital banks, which require only RM300 million in capital funding.
Singapore, on the other hand, required license applicants to have paid-up capital of S$1.5 billion for fully operational digital banks and S$100 million for digital wholesale banks.
According to sources, the majority of applicants for Malaysia’s online-only banks are likely to be Malaysians, with only a few foreign names, such as Southeast Asian internet platform, making the cut. Linklogis is backed by Sea, Grab, and Tencent.
They noted that Sea, which recently received a full digital banking license in Singapore, is cooperating with Malaysian conglomerate YTL Corp Bhd.
Grab and Singtel’s joint venture, which has acquired a complete digital banking license in Singapore, has applied alongside a group of additional investors, according to Singtel.
According to insiders, AirAsia has partnered with a consortium for the application through its fintech subsidiary BigPay. RHB Bank and Axiata have partnered.
Sea and BigPay declined to comment, and YTL did not respond to a request for comment. Because they were not authorized to speak to the media, the sources declined to be identified.
Axiata Digital CEO Khairil Abdullah remarked at a press conference last month that a lack of credit for a large portion of Malaysia’s population has created a “very huge untapped area” for the company to tap into.
Malaysia’s banking sector is dominated by Maybank, CIMB Group Holdings, and Public Bank Bhd.
In a June research, Nomura analysts predicted that the advent of digital banks will increase competition in areas like deposit pricing, fees, and, eventually, loan pricing, where there would be some overlap with traditional banks./n
