Asia Digital Bank targets global market out of Labuan

The digital bank licences that BNM would issue focus on the domestic market

by ASILA JALIL / Pic Source:

LABUAN-LICENCED Asia Digital Bank Ltd (ADB) sees no direct competition from the upcoming digital banks set to be approved by Bank Negara Malaysia (BNM) due to different markets of the target group.

Director of asset management products and wealth management department at Asia Pacific Investment Bank (APIB) Dr Lai Heow Gran said the digital bank licences that the central bank would issue focus on the domestic market, mainly for the financial institutions in onshore Malaysia.

“We are in the mid-shore arena, serving customers from the global market. The main onshore domestic market is not our main market.

“We are open to the whole global market. If not globally, we are at least on a regional level, which is still a different ball game altogether,” he said during a webinar held by APIB and Labuan International Business and Financial Centre (Labuan IBFC) last week.

Additionally, Lai said the digital banking licences issued onshore are for the mass market users while ADB rides on the blockchain technology to provide digital assets to its clients.

“It is a digitised investment bank products or services rather than digitised consumer banking products and services,” he added.

ADB is a digital investment bank, a wholly owned subsidiary of Chinese state-owned APIB.

It was officially approved by Labuan Financial Authority as a digital financial business licensee on Nov 28, 2019.

BNM had received 29 applications for the digital banking licence during the sixmonth application period ended in June.

The bids came from various parties and joint ventures, including state government entities, financial technology players and e-commerce operators.

The central bank is expected to issue up to five licences by the first quarter of next year.

Labuan IBFC CEO Farah Jaafar (picture) said the offshore jurisdiction has seen a growth in the number of licensed entities to date, despite the decline in the number of companies incorporated on the island.

She said the Covid-19 pandemic has led to the reduction, albeit not substantial.

“We have seen a decline in the number of companies that have been incorporated but that is partly due to the slowdown from Covid-19. A lot of it was due to the changes in the international tax landscape and the push towards transparency,” she said.

Regardless, she said the Labuan IBFC is still considered to have recorded a very healthy growth this year. Labuan is currently home to more than 800 licensed holders.

Established on Feb 15, 1996, under the Labuan Financial Services Authority Act 1996, the Labuan Financial Services Authority is the statutory body responsible for the development and administration of the Labuan IBFC.