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This entrepreneur aims to build Malaysia’s first sharia-compliant neobank | Startup stories

Written by Stephanie Pearl Li Published on     5 mins read

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Joe McGuire is the founder of MyMy, a company bidding for one of five digital banking licenses that Malaysia will provide in Q1 2022.

Joe McGuire, co-founder of Kuala Lumpur-based fintech startup MyMy, has been involved in banking and fintech since his early years. At the age of 29, he was already one of the top bankers at Commonwealth Bank Australia (CBA), one of Australia’s largest banks.

As the youngest state manager for Victoria and Tasmania at CBA, two regions that together cover 30% of Australia’s population, he and his team members grew the business by 40% in less than two years, according to McGuire.

His stint at CBA gave him a taste of payment innovation, while McGuire also nurtured a passion for fintech that would lead him on a new venture. In 2016, he was appointed as global head of sales at payments firm Airwallex. The company, which is now based in Hong Kong and reached unicorn status in 2019, was founded in 2015 in Australia to connect small businesses with offshore merchants in China, assisting them in making purchases with lower exchange fees.

McGuire was involved in Airwallex’s expansion into Indonesia in 2017. In the process, he learned about the size of the unbanked population in Southeast Asia—500 million out of the 642 million total inhabitants at that time. In the eyes of McGuire, this represented a tremendous potential for fintech and business opportunities.

Malaysia was the first market he set his sights on. “The Malaysian market has a solid merchant payment terminal footprint. A large part of the Malaysian population already had a Visa or Mastercard in their pockets in 2018. While there were about 1.4 debit cards per person, only 8% of the cardholders used online payments with their cards. Everyone had a card, but no one used it,” McGuire told KrASIA.

“I sold everything I owned in Australia, emptied my bank account, and moved to Malaysia without knowing anyone,” he added.

The traditional financial sector in Malaysia is also “plagued with several issues,” McGuire explained. Most existing banking solutions are not customer-centric and user-friendly. Meanwhile, traditional banks’ legacy infrastructure has impeded the sector’s ability to transform.

Fresh off the boat, while eating in a mamak stall (traditional Malaysian open-air eateries), he was introduced to Kishore Samuel, a marketing and communications veteran with extensive experience in investment management. The two clicked right away and decided to launch fintech startup MyMy in early 2018, focusing on sharia-compliant financial services.

MyMy
MyMy co-founders Kishore Samuel (left) and Joe McGuire (center) after signing an investment deal with the representatives of the Malaysian Armed Forces Cooperative. Photo courtesy of MyMy.

Sharia, which literally means “the way,” is the religious law that governs rituals and day-to-day life in Islam. Sharia-compliant financial services are modeled following Islamic sharia law. “Between Malaysia, Indonesia, and Brunei, there’s a quarter of a billion people in the Islamic population, yet, there are no sharia-compliant banks out there,” McGuire said.

The very first sharia-compliant digital bank was recently launched on April 26. Named Rizq/Baraka, the bank is based in the United Arab Emirates, particularly targeting customers in the Middle East and North Africa.

The key to build a sharia-compliant neobank for the region is to be “unique to Southeast Asia,” McGuire said. In March, MyMy announced a partnership with Sukaniaga Sdn Bhd, an associate company under Malaysia-listed IT service firm Orion IXL, to create a digital banking consortium and bid for one of five digital banking licenses to be issued in the first quarter of 2022 by Bank Negara Malaysia (BNM). As of February, over 40 parties have applied for the digital banking licenses, according to BNM.

In the meantime, MyMy received conditional approval from BNM on April 26 to launch e-wallet services. The license, still under revision, will allow MyMy to offer customers digital accounts with a maximum monetary value of MYR 1,500 (USD 364).

“What we are doing is following the European model. For example, Revolut, still to this day, does not have an actual banking license anywhere in the world. But they operate under equivalent vehicles and have e-wallet licenses and financial services licenses,” McGuire explained, also admitting that obtaining the required licenses to operate in Malaysia is a “very long journey.”

The hardest part is to persuade regulators that the business is viable, McGuire said. “Large corporations are equipped with better resources and can give regulators much more comfort compared to a small startup.”

With 48 licensed e-wallets operators in the market, MyMy will compete with big players like GrabPay, Malaysian bank CIMB Group’s Touch n’ Go, TNG Digital (a joint venture between CIMB Group and China’s Ant Group), and telecom giant Axiata Group’s Boost.

While some successful tech firms in Silicon Valley are born out of garages, McGuire believes that in Malaysia, startups are born in mamak restaurants. Photo courtesy of MyMy.

However, McGuire remains tight-lipped about the value proposition of the digital banking consortium and the upcoming e-wallet service. “We love competition, and it makes us better. The reality is that all of us [fintech players] are striving to improve the financial services offerings in the market. So I don’t think any of the fintech players will be our direct competitors,” he said.

Should the e-money license be approved, MyMy plans to roll out its digital payment products in a pilot model in the third quarter of this year. In addition to the Malaysian market, the firm has already been granted an e-wallet license in an undisclosed country within the ASEAN region, hinted McGuire. MyMy is eyeing to pilot its fintech services in the undisclosed country before the end of this year. Though McGuire didn’t reveal more information about it.

MyMy is also on the lookout for new growth opportunities, with fundraising plans in its pipeline. The company is set to close a second seed round before the end of Q3, with a fundraising target of MYR 10–20 million (USD 2.4–4.8 million). Previous investors in the company’s first seed round concluded last September include the Malaysian Armed Forces Cooperative, a credit cooperative formed for the welfare of former Malaysian armed forces members.

“We’re likely going to raise a Series A funding round next year, with a target of MYR 50 million (USD 12 million),” said McGuire.

This article is part of KrASIA’s “Startup Stories” series, where the writers of KrASIA speak with founders of tech companies in South and Southeast Asia.

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