KUALA LUMPUR – The prolonged delay in announcing the five digital banking recipients does not inspire investor confidence, and instead affirms the regional perception that Malaysia lacks stable government leadership, said a well-placed source.
“The way the regional markets view things right now is that Malaysia does not have stability in decision-making and leadership. The delay in this matter reaffirms the view.
“You can track back on the issue to the regulatory sandbox that was launched in 2016. How long did they take to reach here (implementing digital banking in Malaysia)?”
Compared to its Southeast Asia neighbours, the source said, it is evident that the delay has caused Malaysia to lag in the digital banking sector and has a lot of catching up to do.
In December 2020, Singapore awarded four digital banking licences while the Philippines capped them at six and gave them out last September.
The financial regulator in Thailand has announced plans to follow suit in embracing the concept of virtual lenders as it is looking to issue the guidelines for digital banks by June this year.
Meanwhile, The Edge reported that Bank Negara Malaysia (BNM) will be unveiling the successful applicants for its digital bank licences later today.
The market remains jittery as speculations are rife as to why BNM put the announcement of the licence recipients on hold on March 30.
BNM governor Tan Sri Nor Shamsiah Mohd Yunus had said in February that the regulator was targeting to notify all 29 applicants by end-March.
However, on March 30, she said the central bank will announce, in the near future, its decision on the awarding of up to five licences upon completion of the legal process.
According to the central bank, licensees should meet all prudential criteria expected to contribute towards greater financial inclusion by offering products and services to address market gaps in the underserved and unserved segments.
Delay due to possible political meddling?
With applicants kept in the dark over the reason for the hold up, it goes without saying that speculations are rife, although many industry players have refrained from making public comments.
An industry insider said, based on his observations, he believes there is political meddling involved in awarding the licences.
“One of the digital banking licences is booked to serve the B40 market segment and it falls under the cooperative sector.
“Angkasa (Angkatan Koperasi Kebangsaan Malaysia Bhd) is one of the bidders, along with other cooperatives.
“To say it bluntly, one of the licences is for the Bumiputera and this is where it becomes political,” he said.
On April 12, Entrepreneur Development and Cooperatives Minister Tan Sri Noh Omar said his ministry fully supported Angkasa’s intention to obtain the licence from BNM and offer digital banking products to customers.
In a report by Bernama, Noh said the granting of a licence to the Angkasa-Boustead Holdings Bhd consortium can revitalise the country’s cooperative sector and spur its continued growth.
The other applicants range from banks, industry conglomerates, technology firms, e-commerce operators, fintech players, cooperatives, and even state governments to win the coveted digital banking licences.
Among several consortiums predicted to have the best chance of securing the bid include RHB Bank and Axiata Group Bhd’s Boost, Grab Holdings Inc’s joint venture with Singapore’s telco group Singtel, and Sea Group, which was reportedly bidding with YTL Corp Bhd.
Other frontrunners include Capital A Bhd via e-wallet BigPay with Malaysian Industrial Development Finance Berhad (MIDF), Ikhlas Capital Master Fund Pte Ltd, and South Korean conglomerate SK Group.
Ikhlas Capital, a Singapore-headquartered private equity fund manager, is partly owned by Bank Pembangunan Malaysia Bhd chairman Datuk Seri Nazir Razak.
The AEON Credit Service (M) Bhd and AEON Financial Service Co Ltd consortium is also tipped as a strong contender.
Does BigPay have it in the bag?
A source from the banking industry said the grapevine has it that the BigPay consortium had been chosen as one of the five licensees.
Although nothing is set in stone as of yet, the insider, who spoke on strict conditions of anonymity, said he would not be surprised if the said consortium is the reason for the announcement delay.
This is because, he said, BNM allegedly gave leeway to BigPay to resubmit its application in order to be awarded the digital banking licence.
“Why is BNM taking so long to decide (on the winners), despite the obvious candidates who would immediately be able to deliver the services right now?
“Could it be related to BigPay’s resubmission of documents? Perhaps. At the end of the day, BNM has the ultimate power in calling the shots,” he said.
When contacted by The Vibes, Capital A and BigPay CEO Tan Sri Tony Fernandes and BigPay co-founder Salim Dhanani refused to comment “due to the sensitive nature of the matter”.
BigPay’s partner MIDF, via its spokesman, also said it is unable to comment on this issue.
While parties involved in the consortium choose to remain quiet, a source familiar with the matter said MIDF is “quietly confident in securing the bid”.
It is also learnt that the Grab-Singtel consortium is ready to roll out its banking services and is only awaiting for the official announcement to be made by BNM. – The Vibes, April 29, 2022
