Malaysia’s First Cohort of Digital Banks
● Malaysia’s central Bank is set to award up to five digital bank licences in early 2022.
● Talent acquisition, strategic tech partnerships, and marketing are among the primary considerations for the first digital banks.
They will be crucial to sustainable success in a highly competitive banking and financial services landscape.
SINGAPORE & MALAYSIA – Malaysia will be formally awarding up to five digital bank licences under the Financial Services Act 2013 and the Islamic Financial Services Act 2013 in 2022. Earlier this year, Malaysia’s central bank – Bank Negara Malaysia – had announced it had received 29 applications for a digital bank licence, as of 30 June 2021, with applicants ranging from banks, conglomerates, technology firms, as well as e-commerce and fintech as well as public sector players.
Around this, Singapore mainboard listed Silverlake Axis Ltd. (SGX:5CP)(“SAL” or “the Group)the ASEAN market leader in core banking software, today shared the key considerations for Malaysia’s first digital bank, and for the proceeding licensees within the market.
The top 5 considerations for Malaysia’s first digital banks are:
- Talent fulfillment strategy – Keeping a look-out for special talents with tailored skills to build the digital infrastructure – who need to fit the criteria set by the central bank. Strategize early, head-hunt, interview and acquire the talent you need quickly to avoid facing hiring supply shortage due to the approaching demand surge.
- Developing a strong marketing strategy – A robust marketing strategy for branding and corporate profiling will send strong messages to other industry players on the consortium’s strength, and will help in the search for high-skill talent. Furthermore, a direct-to-consumer marketing strategy that penetrates channels native to digitally savvy, non-digitally savvy and fully unbanked consumers will guarantee the highest discoverability.
- Light-weight technology stack – Constantly reviewing & revisiting the technology stack proposed for your digital bank and identifying redundancies and inefficiencies will improve the speed, stability and reliability of operations. Furthermore, digital banks should identify acquisition opportunities or commercial partnerships with the optimal technology service providers.
- Query response strategy – The right answers to anticipated queries from the central bank, or any additional information they need will undoubtedly strengthen your license application pack. These could include shareholding structure, ESG factors, value & product propositions, comprehensive risk procedures/policies, and independent review/audit procedures.
- Exploring licences in other jurisdictions – Considering a strong MOU exists between the consortium members, a successful digital bank can start expanding, and exploring similar digital bank license opportunities in the region and beyond Asia.
“With Silverlake Axis’ extended legacy of enterprise core software and its implementation, we have learnt the key factors to success that any upcoming digital-centric bank should follow. Many of these lessons were those learnt by our clientele of the largest banks in SEA, on their growth path,” said Andrew Tan, Group Managing Director, Silverlake Axis.
Despite challenges brought about by the COVID-19 pandemic, Silverlake recently posted a robust FY2020, closing over RM200 million worth of contracts in the financial year. In addition, the group expanded its global footprint to include Japan and Dubai and launched new products including MÖBIUS, a 5th generation end-to-end open banking platform and TrueSight, a new value added enabling solution for its insurance ecosystem.