SK South East Asia Investment Pte Ltd., an investment arm under South Korean conglomerate SK Group, has joined a consortium led by Malaysian budget airline AirAsia’s fintech subsidiary BigPay as a financial investor to win a digital banking license in Malaysia.

Details about the Korean partner’s investment and stake size were not disclosed under the agreed terms.

“With the license, the actual business is available from 2024 and thus, nothing has been discussed in detail,” said an official from SK.

If its team wins a license, the Korean company would be able to speed up its push to the fintech business. SK Group in 2015 tried to get an internet-only bank business approval via SK Telecom in a consortium with Interpark but failed. In 2019, it formed an alliance with Kiwoom Securities and 11Street, but the second attempt also ended in failure.

A total of 29 contenders submitted their bids to Malaysia’s central bank for digital banking licenses. A consortium between Southeast Asia’s ride-haling leader Grab and Singapore’ top telecom Singtel, as well as an alliance of Malaysia’s RHB Banking Group and telecom giant Axiata Group are among them.

“If AirAsia wins a (digital banking) license, it will be able to transform BigPay from an e-wallet vying for market share in a crowded field into a full-fledged digital bank,” reported U.S. business journal Forbes.

The BigPay team is also backed by state-owned Malaysian Industrial Development Finance Bhd (MIDF) and Singapore-based private equity firm Ikhlas Capital Master Fund Pte Ltd.

SK was able to join the group after its knowhow in fintech was recognized. Its mainstay unit SK Telecom has been running a joint-venture Finnq for mobile financial services with Korea’s major lender Hana Financial Group since 2016.

Internet-only bank represents a blue ocean of growth potential in Southeast Asia, where a large number of people use internet but have no bank account. In Malaysia, 55 percent of the adults are unbanked or underbanked, according to Bain & Company. And only 39 percent of Malaysians are estimated to be eligible for bank loans, according to consultancy Oliver Wyman.

Malaysia has no dominant banking player, better appealing to the 29 applicants. The central bank plans to pick five finalists for digital banking licenses by the first quarter of next year.

By Pulse

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