3rd June 2021 - 3 min read
Boost Holdings Sdn Bhd has partnered with RHB Banking Group to form a consortium in a bid to apply for a digital banking licence from Bank Negara Malaysia (BNM).
According to Axiata Group Bhd, the parent company of Boost, Boost will own a 60% stake in the digital bank joint venture, whereas the remaining 40% will go to RHB. The partnership will focus on expanding Boost’s fintech offerings that have been developed through Aspirasi (Axiata’s digital micro-financing and micro-insurance provider) as well as the Boost e-wallet.
Through this effort, both parties aim to increase financial inclusion and accelerate the development of digital products and services to the underserved and unserved segments. These include micro entrepreneurs, small and medium enterprises (MSMEs and SMEs), as well as individuals in the gig economy.
The president and group chief executive officer of Axiata, Datuk Izzaddin Idris said that although both parties have yet to submit their joint application for the licence, the digital bank is ready to kick off as soon as it secures one. Additionally, they will be including the Aspirasi loan book into the venture in order to do so.
“We are going to inject the loan book of Aspirasi to kickstart the business of the digital bank. The deadline for submission is 30 June, but it will take BNM about 18 months to decide on the award of the licences. We will only know towards the end of next year,” said Izzaddin.
Izzaddin further shared that although the consortium is currently limited to Axiata and RHB in the interest of expediency, the two parties may still hold discussions on the matter of admitting more partners going forward. “As far as we are concerned, the two partners currently are good to go for submission for the digital banking licence,” he said.
Meanwhile, the group managing director and chief executive officer of RHB, Datuk Khairussaleh Ramli said that this venture will serve as an extension of RHB’s Digital Transformation Programme – a core of its FIT22 strategy. Briefly, the FIT22 strategy is a comprehensive five-year blueprint that was developed by RHB in 2018 to strengthen its presence in Malaysia and to better serve targeted segments.
Khairussaleh also explained that while the bank could attempt to make a bid for the licence on its own, it will have to start looking at new technology stacks and understand how business is being done for small-ticket items.
“That would take a long time. We believe the best way for us to approach this segment is to partner someone who has that experience, and Boost has been involved in this segment – it is not something new for them,” he said, referring to Axiata’s expertise in artificial intelligence (AI) and the new technology stack. Meanwhile, RHB will bring to the table its experience and expertise in running a bank, such as in liquidity, capital, and risk management as well as compliance.
(Source: The Edge Markets)
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world