KUALA LUMPUR (Jan 24): SK Group, South Korea's second largest conglomerate with a market capitalisation of US$177 billion, is looking to expand its reach in the ASEAN financial technology (fintech) space with its investment in BigPay, a Malaysia-based ASEAN fintech company.
In August last year, BigPay announced it had secured up to US$100 million in financing from SK Group, to further its mission to become the leading challenger bank in Southeast Asia. In addition to that, SK had also committed to BigPay's bid to obtain a digital banking licence here.
Earlier this month, SK said it would be joining a consortium comprising BigPay, financial institution Malaysian Industrial Development Finance Bhd (MIDF) and ASEAN private equity Ikhlas Capital in their bid to apply for a digital banking licence from Bank Negara Malaysia.
In an interview on Monday with The Edge, Ken Choi, who is the executive president of SK Group's SUPEX Council in charge of global business development, said the conglomerate could take up as much as a 20% stake in the consortium if its bid for a digital banking licence is successful.
"We invested a relatively small amount in BigPay, but we expect that they will grow not only in challenger banking fields, but also in e-commerce and other emerging industries.
"In the digital banking space, we will be delighted to share our know-how and systems once they get the licence, or go into the lending business aggressively. For example, in Korea, SK Group has an affiliate which uses various data points, including mobile telco data to come up with an alternative credit rating system that will assist its partners in providing lending services to underserved segments. We have experience and knowledge on how to utilise various data into the right service model for our customers," he said.
Under the Financial Services Act 2013, restrictions on shareholding for a digital bank only applies to individuals, with the cap maintained at 10%, while there is no restriction for corporates and other non-individuals.
Choi said he believes BigPay, which is a portfolio company of AirAsia Group Bhd, can leverage on AirAsia's network, and has the potential to become a fintech leader in the Southeast Asian market.
"We believe that AirAsia's presence, reputation and ecosystem would help BigPay expand beyond Malaysia in Southeast Asia. BigPay already has partnerships and businesses in Malaysia and Singapore, and soon in Thailand and the Philippines, so for us it is more efficient to work with them to establish our Southeast Asian presence, rather than with different partners across the countries.
"BigPay also has a high gross transaction volume, and even though their subscribers are less compared to that of their competitors, their customer loyalty is very high — customer loyalty and repeating customers are very important assets especially for financial services," he said.
^Strong confidence in AirAsia's management
On whether SK Group has concerns about AirAsia's recent financial difficulties and its classification as a Practice Note 17 company on Bursa Malaysia, Choi said AirAsia has been coping relatively well given the onslaught of the Covid-19 pandemic, which has impacted performances of most airlines.
"I have a strong belief that they will eventually overcome this crisis, and once the travel industry recovers and synergises with the current digital services that AirAsia is trying to build up, they will probably become more powerful than before. How they would overcome the current difficult situation when cash flow is a concern will be a challenge, but we have strong confidence in AirAsia's management team," he added.