According to The Ken, the two digibanks operated by the Boost-RHB and GXS Bank-Kuok Brothers consortia respectively have had little luck recruiting for crucial risk and compliance, treasury solutions, and lending roles – despite spending 10 months looking for talent. As a result, they “are unable to build their platforms according to their original plans.”
There is an obvious reason for their recruiting woes: Malaysia has plenty of financial services talent, but most of them work in traditional banks. They lack the tech acumen for the digital banking roles. Indeed, Malaysia does not have the same ecosystem of tech start-ups as other Southeast Asian countries like Singapore and Indonesia. Further, top talent would probably prefer to work in Singapore compared to Malaysia given the higher salaries and career advancement prospects in the city-state.
We remain on the fence about the prospects of digital banks in Malaysia. First, the value propositions of these platforms are questionable in a country where 92% of the people have a bank account. The actual unbanked population is small. For Malaysians with a bank account and access to lending, the idea of conglomerates and tech giants teaming up to offer banking services is not all that interesting or attractive unto itself. As for the underbanked population, we can argue that the Google, Bain and Temasek report that is constantly cited may not be accurate. It says 55% of Malaysians are underbanked, but the term is highly subjective.
For the platform companies that have already built up a strong digital financial services platform, perhaps the banking license will be a nice add-on; this may be the case for Boost-RHB and GXS Bank-Kuok Brothers – if they can find the talent, this is.
As for the two holders of digital banking licenses under the Islamic Financial Services Act 2013 (IFSA), this is the type of market niche we believe can make digital banking services more compelling for customers. We will be watching the AEON Financial Service Co., Ltd., AEON Credit Service (M) Berhad and MoneyLion Inc. consortium and the KAF Investment Bank consortium closely.