Malaysia achieved a GMV of more than US$11.4 billion in 2020 (up six per cent y-o-y) while more than 489,000 MSMEs have adopted e-commerce to adapt to the Covid-19 pandemic conditions, Maybank IB Research observes. — Bernama photo
KUCHING: The fintech scene in Malaysia is relatively nascent compared to advanced economies, the research arm of Maybank Investment Bank Bhd (Maybank IB Research) opines, with more than 90 per cent of companies in the industry ranging from start-ups to mid-size, and with only limited regional presence.
According to Maybank IB Research, by count, payment and e-wallet fintechs constitute 35 per cent of the industry, followed by lending, insurtech and Wealthtech.
“The key players in the industry tend to be corporate-backed fintechs, that is, the tech arms of large corporates with a different core business,” the research arm said.
“Major corporate-backed fintech includes Big Pay (Air Asia Digital), Boost (Axiata), and Touch & Go Digital (CIMB and Ant joint venture (JV).”
On e-commerce, Maybank IB Research observed that Shopee (Sea Group) and Lazada (Alibaba) appear to hold their fort strongly, with both having more than 60 per cent market share, and there has been no sign of disruption from other local and foreign companies.
“The rest of the market are businesses’ own portal such as Sports Direct, Body Shop and Harvey Norman.
“Malaysia achieved a gross merchandise value (GMV) of more than US$11.4 billion in 2020 (up six per cent year on year) while more than 489,000 micro, small and medium enterprises (MSMEs) have adopted e-commerce to adapt to the Covid-19 pandemic conditions.”
Maybank IB Research gathered that on the regulatory standpoint, the government of Malaysia, through Bank Negara Malaysia (BNM) and Securities Commission (SC), has made significant progress in developing the industry since 2020, including issuing licenses for digital assets, microlending and most recently, digital banking.
“While the digital banking licensing is still pending decision, BNM has announced that there were 29 applicants in total, whereby five JVs or consortiums will be selected.”
On public market opportunities, Maybank IB Research noted that there are a handful of players providing exposure to the e-commerce, software and fintech sector in Malaysia.
“Their relative scarcity contributes to their premium market valuations, the latter appearing to be more attractive in the US, where there is also much greater flexibility in capital raising.
“Grab and Air Asia Digital have announced their intentions to list in the US via special purpose acquisition company (SPAC) sometime in 2021-2022.”
That said, the research arm also noted it appears that the US Securities and Exchange Commission (SEC) has elevated scrutiny for SPAC listings and the outcome is still unclear.
As for Bursa-listed fintech or payment pureplay, GHL Systems Bhd and Revenue Group Bhd remain the largest, followed by ManagePay Systems Bhd.