BNM awards digital banking licences to Boost-RHB, GXS Bank

Kuok Brothers, YTL-SEA, AEON-MoneyLion, KAF Consortium

Seah Eu Hen

April 29, 2022

KUALA LUMPUR (April 29): Bank Negara Malaysia (BNM) has announced the

five successful applicants for the digital bank licences as approved by the

Minister of Finance, almost a month after the central banks original deadline.

The following applicants are to be licensed under the Financial Services Act 2013

(FSA):

a consortium of Boost Holdings Sdn Bhd and RHB Bank Bhd;

a consortium led by GXS Bank Pte Ltd and Kuok Brothers Sdn Bhd; and

a consortium led by Sea Ltd and YTL Digital Capital Sdn Bhd.

The following applicants are to be licensed under the Islamic Financial Services

Act 2013 (IFSA):

a consortium of AEON Financial Service Co Ltd, AEON Credit Service (M)

Bhd and MoneyLion Inc; and

a consortium led by KAF Investment Bank Sdn Bhd.

Three out of the five consortiums are majority-owned by Malaysians, namely

Boost Holdings and RHB Bank, Sea and YTL Digital Capital and KAF Investment

Bank, said BNM in a statement on Friday.

GSX Bank Pte Ltd is the digital banking group between Grab Holdings Inc and

Singapore Telecommunications Ltd (Singtel), according to the formers filing with

the US Securities and Exchange Commission (SEC) in October 2021.

BNM received a total of 29 applications from companies and partnerships across

different industries, with a mix of foreign and domestic applicants.

The assessment criteria covered the character and integrity of applicants, nature

and sufficiency of financial resources, soundness and feasibility of business and

technology plans as well as ability to meaningfully address financial inclusion

gaps.

"Applications were assessed on their individual merits, as well as relative to other

applications based on consistent evaluations of each assessment criteria. This

horizontal review is based on the assessment criteria applied across all

applicants to determine the relative strength of each application and identify

successful applicants," the central bank said.BNM also said that throughout the assessment process, strict governance and

evaluation procedures were instituted to ensure robust, objective and consistent

assessments across all 29 applications received. Four levels of assessment

were carried out, supported by a cross-functional technical team, a review team

and internal independent observers from BNMs risk and legal departments. The

final recommendations to the Minister were deliberated and endorsed by BNMs

management committee."

Following the announcement, successful applicants will undergo a period of

operational readiness that will be validated by BNM through an audit which may

take between 12 to 24 months, before they can commence operations.

In the statement, BNM Governor Tan Sri Nor Shamsiah Mohd Yunus said,

Digital banks are expected to further advance financial inclusion. By adopting

digital technology more widely for everyday transactions, we can significantly

increase opportunities for our society to participate in the economy by

overcoming geographical barriers, reducing transaction costs and promoting

better financial management."

Digital banks can help individuals and businesses gain better access to more

personalised solutions backed by data analytics. As businesses move online,

digital banking also provides a safer and a more convenient way to transact, she

added.

Question 1 (50 marks)

List and describe TEN (10) benefits that can be derived from this emerging

technology. Your answer can be from the view point of being the customer and/or

financial institutions.