PETALING JAYA: Axiata Group Bhd and RHB Banking Group will be forming a consortium to apply for a digital banking licence from Bank Negara with the aim of accelerating their digital growth strategies.
During a joint virtual press conference yesterday, the parties announced that Axiata’s subsidiary, Boost Holdings Sdn Bhd, has signed a heads of agreement with RHB Banking Group to form the consortium.
RHB Banking Group managing director and group chief executive officer Datuk Khairussaleh Ramli said the collaboration will unlock synergistic opportunities to benefit underserved retail customers and micro-small and medium enterprises (SMEs) that fall outside the normal focus of traditional banks.
“The very nature of a digital bank is to be able to facilitate and serve customers efficiently and conveniently. This is a segment that we are already in but to expand further, we would need to look at getting new technological specs and then trying to understand how the business is done.
“We believe that this will take a long time and the best way for us to approach this segment is to partner with someone that has the experience, ” he said during the virtual press conference.
Khairussaleh said tying up with Boost Holdings would help RHB to fast-track the process.
“We’d like to partner with someone that has the expertise in artificial intelligence and with the relevant specs, whilst we can bring in our own expertise and experience as well. In a nutshell, it’s about going into a new segment of business but partnering with someone who can shorten the learning curve for us within this particular business segment, ” he said.
Axiata president and group chief executive officer Datuk Izzaddin Idris (pic below) said the collaboration is in line with the government’s ambition to close the national digital divide.
“Through innovative, efficient and secure banking services, we are confident our strategic collaboration will meet the fast-evolving demands of segments of retail customers and micro-SMEs overlooked by traditional institutions.”
The parties will seek to expand on Boost Holdings’ extensive fintech experience developed through Aspirasi, a digital micro-financing and micro-insurance provider and the Boost e-Wallet, a top three e-wallet and lifestyle app.
Both parties will also leverage on RHB’s Agile@Scale experience in building successful digital offerings, such as the RHBMyHomeapp, SME integrated eSolutions, Digital SME Financing App (the first AI-enabled digital SME lending app in Malaysia) and eKYCon-boarding solution to spur similar innovation for digital banking customers.
The minimum initial issued share capital of the digital bank is RM100mil, with Boost Holdings owning a majority stake of 60%, while RHB will own the remaining 40%, subject to approval from the central bank.
The deadline for submission is June 30, but it will take Bank Negara about 18 months to decide on the award of the licence.
The central bank reportedly may issue up to five licenses for digital banks by the first quarter of 2022.
Axiata is controlled by Khazanah Nasional Bhd while RHB’s major shareholder is the Employees Provident Fund.
Separately, Izzaddin said the collaboration will also provide both parties with potential synergistic opportunities within the region.
However, he said there were no immediate plans to set up a digital bank with regional parties.
“If that opportunity is presented then we will consider it. However, it will be tricky as different countries will have different jurisdictions in terms of digital banking licences.
“Digital banking is meant to cater to the market it is meant to serve, namely the underserved and unserved. We need to be mindful of the customers that we target, ” he said.
In a joint statement, RHB and Axiata said they are also exploring more opportunities to enhance their joint customer ecosystems, complementary to the digital banking collaboration.
“In recognition of the strength of the parties’ respective SME ecosystems, one potential initiative involves providing combined solutions to SMEs. Axiata currently serves more than 250,000 merchants and micro businesses via their Boost e-Wallet and Aspirasi microfinancing businesses, whereas RHB offers more than 200,000 of its SMEs access to a connected ecosystem of SME banking and business solutions (integrated suite for payments, human resource management, accounting, and financing).
“The digital banking partnership is the culmination of a strong relationship seeded since 2018 with RHB that has seen fruitful partnerships between RHB Islamic Bank and Boost e-Wallet.
These included donations being facilitated via the SyuQR digital platform, a cashless payment facility for government clinics and many others. Both parties will continue to support government agencies in driving cashless payments and digital financial services in Malaysia, ” the statement said.