Grab, Sea Group and Boost among 5 consortiums awarded digital banking licence

Bank Negara Malaysia (BNM) has approved digital bank licences for five applicants. According to BNM, these three applicants are to be licenced under the Financial Services Act 2013:

1. A consortium of Boost Holdings and RHB Bank
2. A consortium led by GXS Bank, a joint venture between Grab and Singtel, and Kuok Brothers
3. A consortium led by Sea and YTL Digital Capital

Meanwhile, the following applicants are to be licenced under the Islamic Financial Services Act 2013:

1. A consortium of AEON Financial Service, AEON Credit Service, and MoneyLion
2. A consortium led by KAF Investment Bank

Three out of the five consortiums are majority-owned by Malaysians namely Boost Holdings and RHB Bank; Sea and YTL Digital Capital; and KAF Investment Bank. The successful applicants will undergo a period of operational readiness that will be validated by BNM through an audit before they can commence operations. This process may take between 12 to 24 months.

According to BNM, all 29 applications received were thoroughly assessed based on factors including business record and experience, soundness and feasibility of the plans, and nature and sufficiency of the financial resouces.

BNM said that applications were assessed on their individual merits, as well as relative to other applications based on consistent evaluations of each assessment criteria. This horizontal review is based on the assessment criteria applied across all applicants to determine the relative strength of each application and identify successful applicants.

Throughout the assessment process, BNM instituted strict governance and evaluation procedures to ensure robust, objective and consistent assessments across all 29 applications received. Four levels of assessment were carried out, supported by a cross-functional technical team, a review team and internal independent observers from BNM’s risk and legal departments. The final recommendations to the Minister were deliberated and endorsed by BNM’s Management Committee.

Bank Negara Malaysia governor Nor Shamsiah said digital banks are expected to further advance financial inclusion. "By adopting digital technology more widely for everyday transactions, we can significantly increase opportunities for our society to participate in the economy - by overcoming geographical barriers, reducing transaction costs and promoting better financial management," she said.

She added that digital banks can help individuals and businesses gain better access to more personalised solutions backed by data analytics. As businesses move online, digital banking also provides a safer and a more convenient way to transact, she added.

Separately, Reuben Lai, senior MD, Grab Financial Group (Digibank) said in a press statement that it will leverage the consortium's combined strengths, including its technology, expertise, data from highly-engaged consuemrs using everyday services, experience providing financial services across Southeast Asia, and deep understanding of the Malaysian market, to redefine the banking experience for underbanked Malaysians and improve their economic outcomes.

At the same time, Singtel's group CFO, Arthur Lang, and board member of the regional digibank joint venture said its consortium partners and Singtel are excited to build a platform that will provide innovative digital banking services for the underbanked as well as the SMEs that are the backbone of the Malaysian economy. "This aligns closely with our goal of harnessing technology to empower people across the region, bringing greater options and positive change as we build something special across the region," he added.

GXS Bank and Kuok Brothers have appointed Pei Si Lai as CEO designate who will form a dedicated team. Subject to regulatory approvals, GXS Bank will hold a 55.45% stake in the proposed Malaysia digital bank.