This article first appeared in The Edge Malaysia Weekly on February 1, 2021 - February 7, 2021

THE Sarawak government’s interest in obtaining a digital banking licence has raised quite a few eyebrows, as it is going up against well-known corporations.

Against this backdrop, little-known Vision Group is hoping to get a bite of the cherry by forming a consortium with the Sarawak government and, possibly, other strategic partners. The company believes its alternative credit model and differentiated digital financial services are suitable for East Malaysia.

But, first, the state government will have to prevail over its rivals, which reportedly include e-hailing giant Grab, tech firm Green Packet Bhd, digital services provider PUC Bhd, conglomerate Sunway Bhd, gaming firm Razer, budget airline operator AirAsia Group Bhd and Axiata Digital, the digital services arm of telco operator Axiata Group Bhd.

In Southeast Asia, Singapore was the first to issue such licences while Bank Negara Malaysia has set an application deadline of June 30 for the “up to five licences” that it may issue to qualified applicants.

A month before the central bank’s invitation at the end of last year, Sarawak Chief Minister Datuk Patinggi Abang Johari Tun Openg announced that the state government had submitted an expression of interest to Bank Negara to set up its own digital bank.

Vision Group managing partner Chua Zhu Lian is banking on the state to be successful, as he sees the digital banking licence as a once-in-a-lifetime opportunity not just for him, but all the other applicants as well.

“There have been no new banking licences issued since the major shake-up in 2001, post the 1997/98 Asian financial crisis, when more than 50 financial institutions were consolidated down to [the] fewer than 10 banking groups today. Given this extremely rare window, many companies have expressed interest to apply for the licences,” he tells The Edge in an interview.

Chua says it is crucial for every applicant to strategise and maximise its competitive edge, given the limited quota.

“Our group has invested significant time and resources in the development of an alternative credit model, as well as an extensive blueprint on the execution of digital financial services that is well differentiated from most of the digital banking models in the world,” he stresses.

Considering that Bank Negara had stated clearly that the main objective of digital banks is to serve the unserved and underserved segments, Chua believes “this agenda can be quite easily met” if there is a digital bank in East Malaysia.

“The value proposition to have a Sarawak-oriented digital bank can be easily formulated and it would certainly be a welcome change to the banking landscape there. As we have seen in China, if the usage of credit and debit cards is less in a particular society, it would be easier for it to rapidly evolve into a cashless society. I think Sarawak has the similar potential for a smooth transition into a cashless society and digital banking,” he explains.

Chua believes the formula will be vastly different from other parts of the world, as the banking products and financial services have to cater specifically for the unique operating environment in the Bornean state.

“There are rural folk who live across rivers and mountains, in geography that many can hardly imagine. One may need to develop alternative credit models to finance uncommon loans for a pepper plantation or for jungle harvesting, which could be subsequently distributed in channels such as a stall by the road or a pasar tani.”

Chua elaborates that these people may not have the privilege of using conventional payment methods such as a credit card or have adequate financial exposure to develop a conventional credit score to kick-start their path to financial empowerment.

“One cannot apply the same assumptions of what can succeed in a more urbanised setting in a unique place like Sarawak. The way of life is just simply different. And with the right execution strategy, I remain optimistic on how a digitally driven approach could lift the citizens to levels of empowerment that are beyond the possibility of the conventional ways of doing things,” he says confidently.

Vision Group is an integrated business enabler ecosystem with three main business pillars — investments, consultancy and private equities, such as property management and e-commerce.

It is worth noting that, since 2017, Chua has also been the director of investments at Fortress Capital, managing equity portfolios focusing on long-term value, tactical situations as well as quantitative investments.

The 31-year-old served as a financial supervisor at Bank Negara from 2011 to 2017, supervising investment, commercial and Islamic banking activities, including fund management, debt capital markets, corporate finance, treasury, corporate banking, commercial, SMEs and various other portfolios.

“I am a Sarawakian and I was honoured to be given a scholarship by Bank Negara 10 years ago and to subsequently work with the central bank as a senior supervisor. So, I am deeply passionate about how digital banking can transform and empower many lives,” he says, given his personal experience of banking as the backbone of a country’s economy.

“I hope that one day, our group can play a part in improving the livelihood of Malaysians, as well as Sarawakians, through meaningful financial and digital projects. If given the opportunity, I hope that our group can be a support partner of parties interested in a digital banking licence.”

Chua says Vision Group has a team of veteran advisers with 30 to 40 years each of banking experience, in the areas of commercial and corporate banking, investment banking, digital transformation, regulations and licensing.

Chua says the Sarawak government appears to be on the right track in creating a digital economy, given the strong tone set by Abang Johari to enhance the existing telecommunication infrastructure state-wide.

“We are hopeful that these initiatives by the Sarawak government will drive the rest of the region in the same direction and benefit the country as a whole. Should the Sarawak government be successful in its digital banking application and implementation, the future trajectory of the Sarawak digital economy will be limitless,” he says of the state’s initiatives, which include plans to establish its own telecommunications company within the next two years to increase internet connectivity in rural areas.

“A digital bank can be a sizeable project even for large corporations or a government; and, in this new age, collaboration is the most sustainable way to increase the probability of success of any business, including digital banking.”

Vision Group is not the only party interested in the licence, though. Market sources tell The Edge that a couple of Sarawak-based conglomerates may also be keen to team up with the state government. “A lot of parties are said to be interested in teaming up with the Sarawak government, but it’s all talk for now, because no one has formally come forward as yet,” says a source.

One name being put forward is Datuk Lion Peh, the managing director and joint CEO of Bullish Aim Sdn Bhd, a pure-play tower company.

Interestingly, Bullish Aim’s website states that its chairman is Pahang Crown Prince Tunku Ismail Idris Abdul Majid Abu Bakar Iskandar ibni Sultan Ibrahim Ismail.

But it is not known whether Peh is pursuing collaboration with the Sarawak government in his personal capacity or under Bullish Aim.

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