Malaysia’s RHB aims to launch digital bank in 2023, CEO says

RHB Bank Bhd. plans to introduce its digital banking platform as early as the second half of next year, its top executive said, as Malaysia’s fifth biggest lender looks to hold back a tide of fintech startups.

The bank and its partner Boost, an arm of communications giant Axiata Group Bhd., could invest as much as RM1 billion (US$212 million) in the venture, RHB’s Chief Executive Officer Mohd Rashid Mohamad said in an interview at his office in Kuala Lumpur. Boost and RHB were among five groups that won digital bank licenses from Bank Negara Malaysia, the country’s central bank, in April. The others chosen include ventures led by Singaporean tech firms Grab Holdings Ltd. and Sea Ltd.

“We plan to launch the digital bank in the second half of next year or latest by the first quarter of 2024,” said Rashid, who assumed his current role in April. The other four license holders haven’t given a timeline on their rollout.

Established firms like RHB are facing pressure from fintech upstarts that move quickly to embrace new technology and are often more willing to burn through piles of cash to peel away their clients.

Asked why the digital bank will have such a long gestation period, Rashid said, “We are building the digital bank from scratch. We need to put up a new core banking system and infrastructure product proposition that are in line with Bank Negara’s requirements.”

Serving the Unbanked

For Malaysia’s central bank, the licenses are an opportunity to encourage lenders to help people outside the traditional banking system to have access to credit and more chances to build wealth.

Through the digital bank, RHB hopes to expand its business to include the “unserved and underserved community” by providing financing as well as a host of banking services. “We will be using more of AI and technologies to assess their credit based on the data points and models that we have put in place.”

RHB is also looking to spread its digitization push beyond Malaysia to the rest of Southeast Asia, home to more than 650 million people. The lender aims to launch a mobile app offering full banking services in Cambodia later this year, pending regulatory approval, as it seeks to position itself among the top 10 banks in the country, Rashid said.

The international business contributed 9% to pretax profit in the first half of this year versus 3% in 2021, Rashid said, adding that RHB aims to have the segment accounting for 15% of pretax earnings by 2024. For Cambodia, Singapore and Indonesia — its three key markets — the group expects to have 1,379 employees by the end of this year, up from 1,230 as of the end of 2021, he said.

In Singapore, RHB plans to expand its corporate and wealth management business while in Indonesia, it will focus on capital market activities and to be in the top 10 stockbroking firms there by 2024, Rashid said.

The lender also has a presence in Thailand, Brunei, Vietnam and Laos. – BLOOMBERG

Dayang Norazhar

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