Boost, the fintech arm of Axiata Group Berhad (Axiata) and RHB Banking Group (RHB) announced they secured the highly anticipated digital bank license (DBL) issued by Bank Negara Malaysia (BNM).
However, both parties did not share any details on when they will launch the digital banking service.
In June last year, the partnership between Boost and RHB to form a Digital Bank consortium was announced, with Boost owning a majority stake of 60%, and RHB owning the remaining 40% in the Digital Bank to drive innovation, increase competitiveness and fast-track the country’s digital transformation ambition.
To deliver on the key criteria established by BNM, both parties will combine their deep expertise in specific areas – Boost’s extensive fintech experience and RHB’s intimate knowledge in banking services and risk management, to build a comprehensive suite of affordable and accessible digital banking and financial solutions. The aim will be to create greater access for financial inclusion digitally amongst the underserved and unserved segments.
Commenting on the development, Dato’ Izzaddin Idris, President & Group CEO of Axiata who is also the Chairman of Boost said, “This is a significant milestone for Axiata’s fintech business and a validation of the strong value proposition we bring to the table with our partners RHB Banking Group. The digital banking business aligns with our collective aspirations to support Malaysia’s digital transformation, as well as the advancement of Axiata’s digital inclusion drive across the region.”
“Securing this license in our home ground delivers multi-pronged opportunities to address ongoing digitalisation shifts across our businesses. On one hand, we can now deliver financial inclusion to underserved and unserved segments such as the Micro and Small and Medium Enterprise community as they scale for growth to support the nation’s economic recovery. At the same time, we’re able to actively meet demand from our expanding digital-first consumer base seeking convenient, improved, and secure user experiences for banking and credit access. This development also reinforces Boost’s experience and capabilities to pursue regional opportunities in this high-growth segment.”
Mohd Rashid Mohamad, Group Managing Director/Group Chief Executive Officer of RHB Banking Group stated, “We are privileged to be part of this exciting chapter for the financial services industry in Malaysia. The Digital Banking license granted to RHB and our partner Axiata is an important step in reinforcing our commitment to continuously enhance our value propositions and better serve our stakeholders, particularly in providing quality financial services to a wider range of customers, in this case – underserved businesses and individuals in Malaysia. Our joint customers will gain access to credit that is digital, nimble, and secure. Which ties in well with RHB’s brand commitment of delivering simple, fast and seamless experiences. We look forward to playing our part in charting the industry’s evolution into this exciting era of digital banking and making progress happen for everyone.”
Over the past few years, Boost said it has been laying the foundation and building the essential blocks for a digital bank, one of which is through a large lending business via Boost Credit. Through this, the fintech player claims it has developed a large digitally engaged core customer base with deep data-driven insights to break new grounds to build strong value propositions that solve the pain points of the underserved. Partnering with RHB enables Boost to leverage the latter’s banking expertise. Boost has been making significant investments in building technology platforms and hopes to be able to launch the service in the near term.
RHB, on the other hand, brings to the consortium many years of established trust with customers and regulatory authorities, as well as proven expertise across key banking areas including core banking services, risk management and compliance, liquidity, capital, operational and credit management, product management, and responsible financing, it said. The Parties will also leverage RHB’s Agile@Scale model to achieve speed in delivery and productivity as well as in building successful digital offerings similar to what has already been achieved in existing innovative offerings such as RHB MyHome app, RHB SME e-Solutions, SME Online Financing (first AI enabled Digital SME lending app in Malaysia), RHB Reflex and eKYC on-boarding solutions.
Boost also signed an MOU with Credit Guarantee Corporation Malaysia (CGC) in June last year through its subsidiary, Boost Credit for a potential digital bank guarantee, and became the first digital bank licensee to collaborate with CGC. The MoU encompasses two key parts – the first is a commitment to explore extending a Portfolio Guarantee for the future Digital Bank’s MSME focused loans, and the second involves a collaboration with CGC in taking up referrals to provide financing for eligible MSMEs without collateral.