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Malaysia digital banking licenceMalaysia digital banking licence

Grab, AirAsia, Razer among firms eyeing Malaysia’s digital bank licence

Malaysia favours applicants whose equity is managed by indigenous firms.

Cab aggregator Grab, Southeast Asian airline AirAsia, gaming company Razer, lender CIMB and telecom firm Axiata are among some of the organisations to have applied for a digital bank licence in Malaysia. Sources privy to the information revealed that some of these organisations have started discussions with consultancies as they are looking to embark on the digital banking journey in the country.

Boosted by access to remotely offered and affordable financial services offered by tech companies that are no longer bound by costly brick-and-mortar locations, regulators across Asia are increasingly bringing new entrants into the digital banking domain.

Singapore said that it has got 21 bids for five digital bank licences this month alone. Last month, the central bank of Malaysia said that it intends to provide a maximum of five licences to new virtual banks that offer either traditional or Islamic banking, that are compliant to the laws of Sharia under a recommended licencing structure that is expected to be rolled out by the end of June this year.

Malaysia indicated that it favours applicants whose equity is managed by indigenous firms. According to the draft proposals in the country, digital banks need to provide services and products to resolve market loopholes in “under-served and unserved segments” and preserve RM100 million (S$33.2 million) in capital initially and scale that up to RM300 million.

Sivaram Krishna, the head of digital banking strategies for Accenture in Southeast Asia opined that regional growth in ASEAN is the way to gain profits. He indicated that those applying for a digital banking licence in Singapore are most likely to do the same in Malaysia too and added that while it is a larger market, the eligibility for minimum capital entry is comparatively lesser for them.

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