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Saturday, October 8, 2022
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    Digital bank licence application race heats up

    THE STAR – IT is less than a fortnight until the closing date of Bank Negara’s digital bank licence application and the heat it is generating is intense.

    Companies are now scrambling to meet the deadline of the application on June 30, which is just days away. It is set to be a crowded race as the central bank will issue only up to five licences.

    Bank Negara has previously said that about 40 parties have registered their interests to apply for the licences, of which it is only looking at issuing up to five by the first quarter of next year.

    Only a handful of companies have openly stated their interests such as telecommunications giant Axiata Group Bhd, which is partnering RHB Bank Bhd; Sunway Bhd; AirAsia Group Bhd through its card-based money app BigPay; tech firm Green Packet Bhd; and the Sarawak state government.

    But as the deadline approaches, more names are starting to surface, including that of conglomerates who are not in the banking or financial services sectors.

    Malaysia-owned energy company Petroliam Nasional Bhd (Petronas) is the heavyweight in the ring, after it emerged alongside other names such as Genting Bhd and New York Stock Exchange-listed Sea Ltd, which is partnering infrastructure conglomerate YTL Corp Bhd, according to recent reports.

    A man holds up a BigPay card

    Sea is a Singaporean tech giant that holds one of the four Singapore digital banking licences. It also owns game developer Garena, Shopee and digital payment system SeaMoney.

    StarBizWeek gathers from market talks that other names which have since come to light are MyEG Services Bhd, a local investment bank, AEON Credit Service (M) Bhd, United States-based fintech startup MoneyLion and Malaysian fintech firm Soft Space Sdn Bhd.

    The fear of missing out is overwhelming, to the point a senior officer of Bank Negara has to remind all applicants to respect the application process.

    In a YouTube talk show by Fintech Fireside Asia on Thursday, the central bank’s financial development and innovation director Suhaimi Ali said there were “a lot of people trying to use connections” to get a headstart in the application process and he has laid down the final word – stop lobbying.

    “One message to all potential applicants out there is to stop lobbying. And because at Bank Negara, we abide by a strict governance process in assessing applications.

    “I would like all parties to respect that process,” he said.

    Suhaimi adds that there is a significant amount of interest from non-banks but regardless if a consortium is bank-led or not, each submission will be assessed equally.

    The red-hot interest in the digital banking space is understandable, considering that this could be the only type of banking licence that will be issued by Bank Negara, at least for now, more than 20 years post-Asian Financial Crisis when banks with smaller capitals were required to consolidate.

    Besides RHB Bank, it does not seem like other conventional banks are interested in applying for the licence, except for CIMB Group Holdings Bhd probably, which has been making great strides on the digital front through its wholly-owned subsidiary Touch ‘n Go Sdn Bhd, which owns 51 per cent in TNG Digital Sdn Bhd, the joint-venture company with China’s Ant Group that runs the Touch ‘n Go eWallet.

    Unless the brick-and-mortar banks are open to explore partnerships on the digital front, they do not need a digital bank licence because they are allowed to digitalise their current operations using their existing licence.

    Meanwhile, MyEG, which is primarily involved in providing e-services for the government, confirms that it will be applying for a digital banking licence.

    In an email response to StarBizWeek, the company said it is applying as a part of a consortium, the composition of which will be disclosed at the end of the month.

    “At MyEG, we believe that technology can transform banking and financial services. With our 21 years of experience and track record in harnessing the power of technology to bring essential government services to the masses in the most reliable, efficient and affordable manner, we are confident that we are in a prime position to leverage our insights and expertise to do the same for banking.

    “Digital banking services would be complementary and synergistic as well as a value-add to MyEG’s range of existing e-government and commercial service offerings,” it said.

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