Grab and Razer are among the notable tech companies exploring bids for Malaysia’s digital bank license, according to a report by Reuters.
Sources told Reuters that other enterprises that may make bids in Malaysia include AirAsia, telecoms provider Axiata, and lender CIMB. KrASIA has also learned that companies backed by Petronas and Khazanah Nasional Berhad, which is the sovereign wealth fund of Malaysia’s government, may also submit applications.
The Malaysian government said in December that it will issue up to five licenses. It is expected to finalize the licensing framework for digital banks in the first quarter of 2020. Digital banks can either conduct conventional or Islamic financial services in Malaysia.
Malaysia’s virtual banks will have an asset cap of MYR 2 billion (USD 492 million) that may last for the initial three to five years of operation. Singapore does not have an analogous limitation.
According to an expert in Singapore who advised clients applying for digital banking licenses in Singapore, Malaysia has ensured that its digital banks will be able to access ATM networks and check-clearing infrastructure, which underserved sectors of Malaysia’s economy will still need access to as clients of digital banks. “Regarding foreign participation, Malaysia has clearly articulated preference for local ‘equity’ control, thereby ending debate about headquarter locations and subjective definitions of management, operating, and board control,” he said.
Last month,  21 applications were submitted to the Monetary Authority of Singapore (MAS). MAS will announce its selection of five digital bank licensees in June. Firms that will hold licenses are expected to commence business by mid-2021.
In Singapore, Grab and Singtel said their digital bank will cater to the needs of digital-first consumers and SMEs, which cite the lack of access to credit as a key pain point. Razer Fintech wants to build the world’s first global youth bank to focus on customers in the youth and millennial demographics.
