Razer is counting on 80m gaming customers in SG digital banking bid

Photo: Razer

Singaporean gaming hardware company Razer plans to branch out into digital banking by tapping its extensive die-hard customer base, hoping to provide financial services for the underbanked millennials in Singapore and beyond.

Hong Kong-listed Razer, which has developed a loyal following among esports fans, offers gamers products and services ranging from high-performance gaming laptops to software, with its software platform being home to 80 million registered users worldwide.

“In emerging markets like Southeast Asia, the gamers are kids or people who have no credit card. They don’t even have a bank account,” Lee Li Meng, Razer’s chief strategy officer, told Nikkei. Such a situation, he said, is an opportunity to provide digital payment and other financial services to this demographic. Banking licenses would help the company to speed up this expansion.

A consortium led by Razer is one of 21 candidates applying for five new digital banking licenses from Singapore’s central bank. Up for grabs are two digital full banking licenses that can serve both retail and corporate customers and three wholesale licenses, in which the holders are not allowed to service retail clients. Razer is applying for the former.

If Razer gets the license, it could offer savings, loans and payment services. While the cost of entry into those businesses is prohibitive, Razer’s ready-made base of 80 million potential clients would help the company gain banking customers on day one without spending on advertising.

“The brand is already there. I don’t have to go there and build a brand,” Lee said.

According to Razer’s proposal, the company is set to establish the subsidiary Razer Youth Bank that will target millennials. Lee said the unit aspires to eventually expand to the Middle East and Western nations. “We are looking at building Singapore as the first country, but our ambitions are not going to be single country because it’s just not big enough.”

In 2018, the company established a fintech arm in response to in-game payment needs prominent in popular titles. That business is taking off: So-called e-wallet operations in Malaysia and Singapore have attracted 1 million users — mostly younger people. In countries such as Malaysia and Indonesia, Razer installed proprietary payment devices in retail outlets, allowing those without credit cards to pay for online purchases. Razer also offers credit card transaction processing services on contract. Those fintech operations have been profitable as well, Lee said.

Within six major Southeast Asian countries, only 104 million of the 400 million adults are fully banked. Even in Singapore, the region’s most advanced economy where nearly everybody has a bank account, 38% of consumers are not well served or have unmet needs, according to an estimate by the state investment company Temasek Holdings.

Southeast Asia’s digital financial services market revenue is forecast to be $38 billion in 2025 — more than triple the 2019 revenue, with digital lending being the fastest-growing segment. This makes pursuing a banking license a natural step for upstarts like Razer that are seeking new profit sources.

Another applicant to a Singapore digital banking license, Sea, an online gaming and retail platform based in the city-state, has grown to be one of Southeast Asia’s largest e-tailers, logging over 300 million orders in the third quarter of 2019 alone. If Sea, which is backed by China’s Tencent Holdings, enters the banking industry, it could extend financing to the small and midsized companies that list on the e-commerce portal.

Yet, their target customers — mainly the young — would not generate as much in fees per transaction due to smaller assets they hold compared with traditional banks’ customers. Success for new players will hinge on whether they can leverage their lack of branches and ATMs into a lean, efficient profit structure.

Singapore’s government has worked since June 2019 to open up its banking sector to players from other industries, seeing an early move in that direction as a potential advantage for the Asian financial hub. Companies outside the city-state — including Alibaba Group Holding affiliate Ant Financial and smartphone maker Xiaomi — have joined the race for digital banking licenses.

The government plans to decide in June which applicants will get the five licenses, with new services expected to launch by mid-2021.

Additional reporting by Kentaro Iwamoto. 

This article was first published on Nikkei Asian Review 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.