Why iFAST has a 50% chance to be a Malaysia digital bank

iFAST is bidding with Koperasi Tentera, THZ Alliance and Mr Lee Thiam Wah, founder and major shareholder of 99 Speed Mart for one of the five Malaysia digital bank licences.

The iFAST-led consortium will be known as iFAST Bank with iFAST owning a 40% stake in the digital bank.

From iFAST.

 “The Malaysian consortium partners are Koperasi Angkatan Tentera Malaysia Berhad (“Koperasi Tentera”), THZ Alliance Sdn. Bhd (“THZ Alliance”), and Mr Lee Thiam Wah, founder and major shareholder of 99 Speed Mart Sdn. Bhd (“99 Speedmart”).

Koperasi Tentera is one of the largest and most successful credit co-operative in Malaysia and has recently embarked on a transformative journey to become a co-operative bank. THZ Alliance is a private investment holding company founded by Y.M Tengku Dato’ Dr. Hishammuddin Zaizi bin Y.A.M Tengku Azman Shah Alhaj. 99 Speedmart is Malaysia’s homegrown grocery chain boasting an expansive network of over 1,900 retail outlets across Malaysia. The vast experience and market reach of these consortium partners will enable iFAST Bank to better address the needs of the underserved market, thereby improving financial inclusion and growth in Malaysia. Internationally, the iFAST Bank consortium comprises Yillion Fintech Pte. Ltd. (亿联科技) which provides the core digital banking technology and capabilities for Yillion Bank (亿联银行). Yillion Bank is one of the four digital banks in China founded by Zonfar Financial Holding (中发金控投资管 理有限公司) and Hong Kong-listed Meituan Dianping (美团点评).

iFAST press release, 30 June 2021

In my view, the iFAST consortium has a 50% chance of winning a Malaysia digital bank license because of its strong local content, wide distribution network and focus on the bottom 40% (B40) population in Malaysia.   

Firstly, the iFAST consortium has strong local content and ties to the local Malaysian community. Malaysia’s central bank said that “preference will be accorded to an application where the controlling equity interest in the proposed licensed digital bank resides with Malaysians.” iFAST will only own 40% of iFAST Bank and the consortium will be 57% owned by Malaysians. Mr Lim, the CEO of iFAST is also a Malaysian citizen. iFAST Bank partners also have close ties to the local community. As a military credit cooperative, Koperasi Tentera has more than 150,000 members which includes the Malaysian army and Ministry of Defense employees. Tengku Dato’ Dr. Hishammuddin Zaizi is the first cousin of the Sultan of Selangor.

Second, iFAST Bank will have a wide distribution network with 99 Speedmart’s 1,900 grocery stores in 11 Malaysia states potentially having the ability to dispense cash or sell financial products.  99Speedmart stores in Malaysia already allow customers to collect parcels, pay bills and reload their prepaid SIM cards so expanding their range of services provided should be achievable.

Third, iFAST’s focus on the bottom 40% (B40) population in Malaysia is politically shrewd. iFAST has already announced plans to offer financial products for the underbanked such as “free life insurance, interest-free loans for daily necessities, and micro investments and insurance”. This emphasis on the underbanked was not obvious in iFAST’s previous bids for a Hong Kong and Singapore banking license.

Lastly, iFAST has more experience, cash and resources to bid for this license. This will be iFAST’s third attempt at a digital bank license after the company failed to secure a license for a Hong Kong and Singapore bank license in 2018 and 2020. iFAST’s net cash position has increased to SGD58 million compared to SGD40 million in 2019 and the company’s market cap is up almost 8x since 2018.

Competition for the banking license will be intense with reports pointing to 40 potential bidders for the five licenses.

The list of confirmed bidders include large Malaysian financial institutions such as:

  • AEON Credit
  • Axiata & RHB Bank
  • BigPay/MIDF/Ikhlas Capital
  • Grab/Singtel/Malaysian investors
  • GreenPacket/Zico/M24 Tawreeq
  • ManagePay
  • Paramount/Star Media Group/RCE Capital

Successful applicants will be announced on the first quarter of 2022. Winning a digital bank license will allow iFAST to accelerate iFAST’s customer and asset growth in Malaysia so I’m excited to see the results!

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