Malaysian e-wallet provider Touch ‘n Go (TNG Digital), the fintech service launched in collaboration with Malaysia’s Commerce International Merchant Bankers (CIMB) and the Chinese Ant Group, is powering ahead with expansive growth plans into the world of financial services.
There is no doubt that an efficient, innovative digital banking sector can only be good for the Malaysian economy. It will enable improved fiscal decisions, ensure more efficient distribution of resources and, therefore, provide a greater inward flow of external investment and demand for the ringgit, which has caught the eye of many a forex trader in recent months. The ringgit has strengthened considerably against the US dollar by almost 10% in the last 12 months. That is a sizeable amount given that most forex trading tries to take advantage of inherent volatility for much smaller percentage gains.
Touch ‘n Go has been a major part of Malaysia’s fintech scene since it was established in 1997 around the dawn of the ‘dotcom boom’. It’s since expanded to become the leading digital wallet in Malaysia, with an active customer base of more than 15 million people. It was originally founded to act as a card-based solution for the nation’s toll roads to ease congestion at the tolls. However, it has since evolved into the primary driver of the cashless economy throughout Malaysia.
The company is seeking to raise upwards of US$150 million in funding from external sources which will water down the shares of CIMB and Ant Group, although the pair will still remain majority shareholders.
Touch ‘n Go keen to move into the world of financial services
It’s no coincidence that Touch ‘n Go is looking to embrace the world of financial services at a time when Bank Negara Malaysia is becoming increasingly open to non-conventional digital banking. Although the company has not formally confirmed it is seeking a digital license to operate under Bank Negara Malaysia, its group CEO Effendy Shahul did confirm the company was “studying the matter” and “definitely looking at the possibility”.
Malaysia looking to Singapore for a winning digital banking blueprint
Up to five digital banking licenses are likely to be issued by 2022. Although that doesn’t necessarily mean that Malaysian consumers will have five new challenger banks and innovators to choose from next year. When Singapore unleashed its own digital banking licenses just four of the available five were granted from the outset.
The framework proposed for Malaysia’s digital banking licenses has been widely praised by innovators. Joe McGuire, who founded fintech start-up MyMy with a focus on digital Islamic banking services, described it as an “essential piece of regulation” to enable Malaysian fintech innovators to “compete” on a “regional and international” financial services stage.
The International Monetary Fund (IMF) has also praised Malaysia for its fintech sector and the way in which it has become “a part of everyday life”. It cites Malaysia’s growing middle class population and subsequent high penetration of smartphone and tablet devices as a major reason for the digital economy to thrive here. 4G mobile network coverage is “near-universal” in Malaysia according to the IMF and the World Economic Forum ranked Malaysia higher than the likes of China and Italy in terms of its “network readiness” for 5G and a digital economy that benefits from mainstream adoption.