THERE are three foreseeable challenges that the winning bidders of Malaysia’s digital banking license will encounter in their quest to build a formidable ecosystem for the future of the country’s digital banking.
Top of the list is the very fact that competition to secure ecosystem partners is going to be extremely high.
After all, there has not been new competition in the Malaysian banking industry for a very long time and suddenly the country will see an emergence of five new digital banks.
“These new digital banks and existing banks are all going to be competing fiercely to secure the best ecosystem partnerships,” Siew Yuen Tuck, co-founder and CEO of Jirnexu Sdn Bhd, Southeast Asia’s full-stack fintech company, told FocusM.
“On top of this, several of the largest digital ecosystem players (Grab, Shopee, and Boost) are all reportedly bidding for their own licenses so they may not be willing to work with other digital banks. How can banks differentiate themselves to secure the best ecosystem partners?”
As the application period for digital banking licenses closed June 30, Bank Negara Malaysia (BNM) received 29 applications for a maximum of just five licenses.
On July 21, Jirnexu signed strategic partnership agreements with more than five consortia in their bids for a digital banking license.
Two other challenges as observed by Siew are as follows:
- The digital banks need data partnerships that can give them a competitive advantage.
Existing banks have decades of data that help decide whether or not to approve a new customer, how much interest to charge them, and how much they should lend. As new digital banks start with zero data, any data partnership that can provide a strategic advantage will be key.
- Are all ecosystem partners ready to integrate with digital banks to enable a truly digital ecosystem?
Using the property market as an example, even if the bank is 100% digital, what about the lawyers, property developers and valuers? Unless all the stakeholders are digital-ready, there will be significant challenges in creating a truly digital ecosystem.
According to Siew, Jirnexu is in a position to help new digital banking partners launch their products and grow their customers faster and more effectively with the company’s technology, data, and digital know-how.
“For example, our very own financial advisory platform, RinggitPlus.com, is in a unique position because we can identify segments of the market which are underserved by the existing banks,” he noted.
“The RinggitPlus Score enables a new digital bank to target and approve the right target customer from day one. Our digital lending solution enables digital banks to provide real-time online approval and risk-based pricing, helping them to differentiate their product from competitors.”
Established in 2012, Jirnexu delivers end-to-end digital acquisition platform, digital acquisition technology, alternative credit scoring, lending-as-a-service (LAAS), and digital marketing solutions and services for financial services institutions (FSIs) and service providers in Asia.
In Malaysia, Jirnexu also works with all existing major local and international banks in the market. – Aug 12, 2021
