Razer Fintech keeps options open on digital banking licence in Malaysia

by BERNAMA / pic by BLOOMBERG

ON ITS own or in a consortium, Razer Fintech is keeping its options open in vying for one of the five digital banking licences to be offered by Bank Negara Malaysia (BNM), its CEO Lee Li Meng said.

“There is a lot of speed dating that is happening in the digital banking environment. I have spoken to a few myself and we are keeping our options open,” he said.

Razer Fintech, which is mainly a gaming company, has partnered with Berjaya Corp for its e-wallet Razer Pay in Malaysia that is accepted in more than 6,000 retail and food and beverage outlets.

“End of the day, it all depends on BNM’s requirement and regulation framework. So, we are keeping our options open,” he told Bernama in an exclusive interview.

In Singapore, Razer Fintech leads a consortium of Sheng Siong Holdings, FWD Group, LinkSure Global Holding Ltd, Insigna Ventures Partners and Carro to bid for a digital full bank licence. It will take up a 60% stake in Razer Youth Bank while the remaining by its consortium partners.

In Malaysia, besides Razer Fintech, several other companies that are exploring bids for Malaysia’s digital bank licence are Grab Malaysia, AirAsia Group Bhd, Axiata Group Bhd and CIMB Group Holdings Bhd.

Lee said its strategy in Malaysia would be the same as in Singapore, which is to rely on the youth.

“Malaysia has a huge youth population, a market that is underserved,” he said, adding that Razer Fintech would “go after” those that do not have a current bank account or that is inactive.

Or in a nutshell, “banking the unbanked”, he said.

According to BNM, as of 2018, out of the Malaysian adult population of 24 million, it estimated that about 10 million did not use online banking while two million remained unbanked.

“There remains a segment of the population that is currently even the local banks are trying to get traction but can’t as the product offerings don’t fit in, especially among the youth and B40 (bottom 40% income group),” he said.

Virtual banks, Lee said, would be more niche in its product offerings and without legacy issues that are embedded with traditional banks, it can accelerate faster.

“Existing banks are bogged down by legacy infrastructure, branch and human cost. Even if they innovate, the cost will still be there which means they can only do certain things at a certain level where they cannot lower the cost over the minimum amount to lend or deposits taken.

“We don’t have such legacy issues. We are building from scratch but a lot of it is on the digital platform and access to the best of the tools that are available. I do not need to spend money to build up a bank branch or hire a bunch of people to sit there. So, it paves the path to scale up a lot faster.”

However, Lee acknowledged that it would be too optimistic to say that there will not be a challenge at all from the incumbent banks, but if the focus is niche then there is a higher probability of success.

As for cyber security, which is critical and central of most businesses now, especially in the financial and banking services, he said Razer Fintech is steadfast in working with the best in the field.

“It will be our top priority,” he said.

A PricewaterhouseCoopers’ report found that 74% of Malaysians are interested in becoming a customer of a virtual bank and 77% are interested in additional services provided by banks beyond the usual financial products.

About 45% of the total 1,517 respondents said that they are looking for a virtual bank to offer a better mobile and digital experience.

Backed by the leading global lifestyle brand for gamers synonymous with the youth and millennials, Razer Fintech is the financial technology arm of Razer Inc established in April 2018.

Razer Fintech has grown to become one of the largest online-to -offline digital payment networks in South-East Asia and has processed over billions of dollars in total payment value. Razer Fintech operates two verticals, Razer Merchant Services and Razer Pay.