When the application deadline for digital banking licenses closed on Wednesday, Singtel and Grab’s joint venture, Malaysia-headquartered budget airline AirAsia’s payments unit, and a consortium led by Singapore-based online brokerage firm iFast were among those who tossed their hats into the ring.
With over 50 firms gunning for the licenses in Malaysia, other notable applicants include a consortium formed by Tencent-backed Linklogis and Malaysian conglomerate Sunway, as well as local telecom giant Axiata Group, according to Reuters, which cited a source familiar with the matter.
BigPay, the fintech unit of AirAsia, said on Thursday that it had submitted a bid too. The firm has formed a consortium consisting of Malaysian Industrial Development Finance Berhad (MIDF), Singapore-based private equity fund Ikhlas Capital, and a “foreign conglomerate.”
“Being granted a digital banking license would allow us to provide individuals, freelancers, and micro, small, and medium enterprises with full-fledged financial services designed with the same ethos,” said BigPay CEO and founder Salim Dhanani in a press release.
In March, local fintech startup MyMy said it had formed a partnership with Sukaniaga Sdn Bhd, an associate company under Malaysia-listed IT service firm Orion IXL, to create a digital banking consortium and build the first sharia-compliant neobank in the region.
The traditional financial sector in Malaysia is “plagued with several issues,” MyMy’s co-founder Joe McGuire told KrASIA in a previous interview. He explained that as traditional banks’ legacy infrastructure has impeded the financial sector’s transformation, most existing banking solutions are neither customer-centric nor user-friendly.
There is potential for change in areas where the conventional banking sector falls short. In all, 74% of Malaysians were “interested in becoming a customer of a virtual bank” in 2019, a rate higher than Hong Kong and Singapore, according to a report published by accounting firm PwC that year. Among them, 65% of the interviewees said pain points and frustrations were prevalent in services offered by traditional banks.
Bank Negara Malaysia, the country’s central bank, is set to award up to five digital banking licenses in the first quarter of 2022.