Axiata Digital, a subsidiary of telco conglomerate Axiata Group, is looking to apply for a digital banking licence in Malaysia as the race to set up a maiden virtual banking service intensifies in the country.
Its chief executive officer Mohd Khairil Abdullah told DealStreetAsia that the Kuala Lampur-headquartered group has evinced interest to foray into digital banking, but the time frame depends on Bank Negara’s final policy on the licence.
“I expect it will be around the second quarter or third quarter. Once the policy is out, we will be putting in our applications,” he said.
Late last year, in December, Malaysian central bank Bank Negara issued an exposure draft on licensing framework for digital banks, which is expected to be finalised by June-end. He then highlighted that as many as five licences will be doled out to new online banks offering either conventional or Islamic banking in the country.
Axiata Digital, that owns digital mobile wallet (e-wallet) app Boost, claims to have as many as 4.7 million users and 112,000 merchants as of third quarter of last year.
“We see massive potential for digital banking because there is still a large unbanked and underserved population in Malaysia, such as micro-small and medium-sized enterprises, overseas foreign workers, millennials, gig-economy participants,” said Khairil. He added that the current banking business model alone is not enough to serve profitably without leveraging digital technology.
By using technology, Khairil said, the unit economics of serving diverse segments would become positive as technology would drive down acquisition, distribution and under-writing costs for a slew of financial products.
“This will then open up major segments of the population that today are not well served by banks,” he added.
Digital banking is one segment that is hotting up with action not only in Malaysia but in neighbouring country Singapore as well.
In Malaysia, those who are reportedly looking to place their bids include prominent names such as ride-hailing giant Grab, gaming firm Razer, low-cost carrier AirAsia and lender CIMB, among others, per a report recently published by Reuters.
Meanwhile, in Singapore, as many as 21 applications have been received already for five digital bank licences.