That the Grab-Singtel venture was the first to launch is no surprise. The same two companies operate at a digital bank in neighboring Singapore, and Grab was originally based in Malaysia before it moved its headquarters to the city-state. At the same time, GXBank counts the Kuok brothers among its investors. The Kuok Group is a giant in Malaysia, a conglomerate that spans agribusiness, real estate, hospitality, logistics and digital infrastructure.
If GXBank can leverage the resources of the Kuok Group, it may be able to quickly build up its customer base. There could some opportunities to cross-sell services.
That said, it is unclear who exactly GXBank plans to focus on in terms of customers. 92% of Malaysians have a bank account. The country is middle income. The 8% of Malaysians without an account (about 3 million people) live mostly in remote rural areas and little or no income. That doesn’t sound like a big market opportunity.
As for the 55% of Malaysians that Bain & Company estimates are underbanked, we would say that “underbanked” is a relative term. It can be adapted to fit the needs of the situation. If your goal is to pump up the digital banking opportunity in a country, but the absolute number of people without a bank account is low, then you might want to instead focus on those individuals and businesses you see as being persuadable to opening a new account.
At the same time, Malaysia’s big incumbent banks aren’t especially behind when it comes to digitization. The country’s largest lender Maybank has a dedicated digital platform, Maybank2u, while CIMB actually has a standalone digital bank in the Philippines, though not at home. The large incumbents also are very well capitalized and can easily respond to challenges from digital banks if they feel it is necessary to do so. They aren’t going to see market share erode just because a couple of platform companies like Grab and Sea launch a digital banking platform.
That said, there could be opportunities for Malaysia’s digital banks in segments like remittances, distribution of third-party investment and insurance products and some lending as well when it ties in with their respective ecosystems Sea’s digibanks in Malaysia, for instance, might focus on supply chain financing for e-commerce merchants given the prominence of Shopee in the country.
Looking ahead, the next digibank in Malaysia expected to launch is Axiata Group’s. Vivek Sood, the bank’s chief executive, told Malaysian media in May that the initial capital commitment for the digital bank would be around RM100 million, that it would offer savings and current account products, insurance products and more, starting at the end of this year.