Malaysia digital banking lures dozens of firms as fintechs expand in Asia

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01/07/2021 05:47

By Anshuman Daga
    SINGAPORE, July 1 (Reuters) - Southeast Asian
ride-hailing-to-fintech group Grab and budget airline AirAsia
 AIRA.KL  were among more than a dozen bidders involving over 50
companies that are vying for digital banking licences in
Malaysia, people familiar with the matter said.
    Others who submitted bids by Wednesday's deadline included
telecoms operator Axiata  AXIA.KL  and a consortium backed by
Chinese tech firm Tencent  0700.HK , said the sources.
    They have been drawn in by relatively low financial entry
barriers and the promise of a growing army of young smartphone
users in a country with a population of more than 32 million.   
 
    Malaysia's move to open up its banking sector comes as Asian
markets such as Hong Kong, Singapore and the Philippines are
ushering in new players, mostly fintech firms, who are taking on
incumbents with their low-cost and newer services.
    The Malaysian central bank https://www.bnm.gov.my/-/policy-document-on-licensing-framework-for-digital-banks
 has said it will issue up to five licences by early 2022.
    "Malaysia has many of the characteristics digital banking
players are looking for, with a sizeable population, large
smartphone penetration and young population eager to try out new
services," said Shankar Kanabiran, financial services consulting
partner at EY.
    Malaysia requires only 300 million ringgit ($72 million) of
capital funds for digital banks, which has drawn interest from
fintechs to money remittance companies to co-operatives
representing banks and housing sectors.
    In contrast, Singapore needed license applicants to have
S$1.5 billion ($1.1 billion) in paid-up capital for fully
functioning digital banks or S$100 million for digital wholesale
banks.
    Sources said that most of the applicants for Malaysia's
online-only banks were likely to be local, with only a handful
of foreign names such as Southeast Asian internet platform Sea
 SE.N , Grab, and Tencent-backed Linklogis  9959.HK .
    Sea, which won a full digital banking licence in Singapore,
is partnering with Malaysian conglomerate YTL Corp Bhd
 YTLS.KL , they added.
    A joint venture of Grab and Singtel  STEL.SI , which also
won a full digital banking licence in Singapore, has applied
with a consortium of other investors, Singtel said on Thursday.
 urn:newsml:reuters.com:*:nFWN2OC169 
    AirAsia has tied up with a consortium for the application
through its fintech unit BigPay, sources said. Axiata has teamed
up with RHB Bank  RHBC.KL .  urn:newsml:reuters.com:*:nL2N2NK0A0
    Sea and BigPay declined to comment while there was no
response to a query sent to YTL. The sources declined to be
identified as they were not authorised to speak to the media. 
    At a news conference last month, Axiata Digital CEO Khairil
Abdullah said that a lack of access to credit for a big chunk of
Malaysia's population had created a "very sizeable underserved
segment" for the company to tap into.
    Maybank  MBBM.KL , CIMB Group Holdings  CIMB.KL  and Public
Bank Bhd  PUBM.KL  dominate Malaysia's banking sector.
    Nomura analysts said in a June report that the entry of
digital banks would intensify competition in segments such as
deposit pricing, fees, and later, loan pricing where there might
be some overlap with conventional banks.
($1 = 4.1530 ringgit)
($1 = 1.3452 Singapore dollars)

 (Reporting by Anshuman Daga; Additional reporting by Liz Lee in
Kuala Lumpur; Editing by Sumeet Chatterjee and Muralikumar
Anantharaman)
 ((anshuman.daga@tr.com;))