Axiata, RHB team up to mount joint bid for digital banking licence

PETALING JAYA: Axiata Group Bhd and RHB Banking Group today entered into a heads of agreement to form a consortium to formalise their joint bid for a digital banking licence under the framework issued by Bank Negara Malaysia (BNM).

The partnership will entail Axiata’s subsidiary Boost Holdings Sdn Bhd having a 60% stake in the venture, while RHB will hold the remaining 40%. The yet-to-be-named joint venture will have an initial paid-up capital of RM100 million as outlined by the central bank’s framework.

The consortium is expected to benefit from fintech experience through the microfinancing and microinsurance operations offered by Boost’s Aspirasi and Boost e-wallet’s user base to complement RHB’s digital offerings as well as its liquidity management and compliance expertise.

“We are going to inject the loan book of Aspirasi to kick-start the business of the digital bank,” said Axiata president and group CEO Datuk Izzadin Idris.

To date, Aspirasi’s microfinance operations have disbursed over US$100 million (RM413 million) across the region.

Izzadin said the partnership would unlock synergistic opportunities to benefit underserved retail customers and micro-small and medium enterprises that fell outside the normal focus of traditional banks.

In regard to the intense competition for digital banking licences, RHB group managing director and CEO Datuk Khairussaleh Ramli believes the two have a strong proposition given their track record catering to the underserved segment as well as their presence in the digital space.

“If we couldn’t find the right partner, we would not have done this and we believe we have got the right partner in Axiata, where both sides will be able to bring our own respective expertise and experience to offer our digital bank proposition,” he said.

Khairussaleh pointed out if RHB were to venture into this segment alone it would require the bank to start looking at new technology stacks and try to understand how business is being done for these small-ticket items.

“We would like to partner someone that already has experience and can bring in expertise in the form of AI and the new technology stack, while RHB can bring in its experience and expertise in the running of a bank, such as in liquidity management, capital management, risk management and compliance,” he said at a virtual press conference today.

Outside of digital banking, the two parties are exploring more opportunities to enhance their joint customer ecosystems. In this area, it has singled out combined SME solutions as a potential given their significant customer base in the particular demographic.

As for overseas operations, Izzadin stated that they have no plans for collaboration in the digital banking space in foreign markets where they are both present.