This article first appeared in The Edge Financial Daily on April 26, 2018 - May 2, 2018

KUALA LUMPUR: The market for e-wallets is getting crowded as more players, banks and non-banks alike, are offering the product, according to RHB Bank Bhd. As such, the group will be looking at collaborations with existing digital wallet providers rather than going it alone.

“What is important is to think about which e-wallet players in the market that we want to work with. That’s our way forward,” RHB Bank group managing director Datuk Khairussaleh Ramli told a media briefing after the group’s annual general meeting yesterday. He also expects the e-wallet market to see some consolidation.

As part of its five-year transformation plan entitled “FIT@22”, the e-wallet is one of the digital initiatives that RHB Bank is undertaking. The group also plans to launch two or three applications within two months, focusing on the mortgage and the small and medium enterprise (SME) segments.

“We will be launching something by the end of next month as a continuation of our mortgage journey, but in a different form from our existing mortgage app,” Khairussaleh said.

The group, in November last year, launched the MyHome RHB app enabling applicants to apply via mobile phones for their mortgages in Malaysia. So far, it contributes 16% of the bank’s mortgage applications.

“We will also be launching another app for SMEs on a minimum viable product basis,” he said, adding that the bank’s digital push will continue focusing on improving on its earlier products. The group already offers the iSmart web application enabling sales teams of SMEs to track customer information on the go.

To help develop and incubate its three new apps, RHB has allocated over RM200 million for three to five years for this programme, part of the bank’s push for digitalisation under FIT@22.

Apart from apps and potential e-wallet partnerships in the near future, RHB Bank has existing partnerships with different digital platforms to streamline different transactions for its customers. “We have partnered TableApp, used to make restaurant bookings.” Khairussaleh said.

The mortgage and SME segments are expected to drive RHB’s loan growth going forward. The group has set a 6% loan growth target for 2018, versus 3.7% achieved in 2017. This will be coupled with a comeback from the group’s Singapore operations, plagued by losses over the last two years, Khairussaleh said.

As the group does not expect to see any major reduction in costs, it said any increase in revenue would be from fee-based income.

“One of the challenges we may see to [meeting our] loan growth [target] is corporate repayments,” Khairussaleh said, adding that the group would need to do more to support repayments.

Meanwhile, the group reaffirms it is targeting a return on equity (ROE) of between 9% and 10% in 2018, and will aim to increase its five-year ROE target up to 11.5% by end-2022.