Contenders for Malaysia’s maiden digital banking licences

Fintech players backed by major financial entities are the most likely candidates for the licences


THE race for the setting up of Malaysia’s maiden virtual banking service continues to intensify, especially after Bank Negara Malaysia’s (BNM) announcement on further details that outline the venture.

In the Exposure Draft on Licensing Framework for Digital Banks published on Dec 27, the central bank stated that it is going to issue up to five licences to qualified applicants to operate such services, for either conventional or Islamic banking in the country.

BNM has also set a minimum capital fund unimpaired by losses by RM100 million for the virtual bank’s foundational phase, which would be increased to RM300 million subsequently.

MIDF Amanah Investment Bank Bhd senior analyst Imran Yassin Yusof said that financial technology (fintech) players that are backed by major financial entities are the most likely candidates suited to apply for the virtual banking licence.

“We believe that e-wallet providers could be the major contenders. With the capital requirement set at RM100 million, those with strong backers, such as Boost, Grab, Touch ‘n Go (TNG) and BigPay, are deemed the strong contenders.

“We will not be surprised if telecommunications (telco) players are also interested in the venture,” he told The Malaysian Reserve.

While some local banks have also reportedly expressed their interest to acquire the licence, Imran Yassin said established financial services’ participation in virtual banking could, however, be redundant given the limited space.

“We opine that it is a bit redundant for established banks to apply for the license. Their current banking license already allows them to offer their products through digital means.

“It could also tie up their capital. However, we do not discount the possibility of established institutions joining some of the fintech or e-wallets to form partnerships and apply for the license,” he said.


With its customer base inching up to 150 million, telco provider Axiata Group Bhd could be one of the top contenders for the maiden establishment of a digital banking ecosystem in the country.

Its digital arm, Axiata Digital Services Sdn Bhd, has been running the financial technology for the telco, including operating Boost, one of Malaysia’s e-wallets.

Launched in 2017, Boost is currently one of the largest cashless payment providers in terms of the customer base. It reportedly has close to 4.6 million users.

Boost has been selected as one of the platforms to disburse the government’s e-Tunai Rakyat initiative, which involves a total of RM450 million incentives to boost Malaysians’ e-commerce activities.

Axiata Digital Services CEO Mohd Khairil Abdullah previously said the group has been expressing its interest to take part in the country’s digital banking ecosystem.


Another possible technology firm that could be aiming for the virtual banking licence is Grab Malaysia.

Analysts said Grab Malaysia’s involvement in virtual banking is reasonable as it is already on the move to apply for a digital banking licence from the Singaporean government.

Grab Holdings Inc is partnering Singapore Telecommunications Ltd for the setting up of the virtual bank, in which Grab will own a 60% interest.

The virtual bank is targeting consumers who are heavily reliant on digital communications.

With e-wallet GrabPay under its belt, the technology firm could leverage on its wide customer base, which has grown to reportedly more than 160 million across the region, including in Singapore, Vietnam and Malaysia.

TNG eWallet

Analysts also include e-wallet provider TNG as another candidate that would submit its application for a licence to operate a digital bank in the country.

Having established the electronic payment system through RFID (radio frequency identification) and PayDirect in its operating mechanism, its operator, TNG Digital Sdn Bhd, is considered as one of the strongest contenders to get a licence.

TNG is also supported by an established bank, namely CIMB Group Holdings Bhd that holds a 52% stake in Touch ‘n Go Sdn Bhd — the operator of the smart card that is used as an electronic payment system.

CIMB group CEO Tengku Datuk Seri Zafrul Aziz previously mentioned that TNG is looking to expand its product within the e-financial segment.


AirAsia Group Bhd’s financial service, BigPay, has also been named as one of the prominent technology players that is aiming for the licence.

With a customer base of more than 700,000 users and the potential to leverage on AirAsia’s 63 million passenger database, BigPay is suited for the development of virtual banking in the country.

BigPay’s services currently encompass mobile payments, cash withdrawals, prepaid debit MasterCard, point-of-sale transactions and remittance service.