Malaysia-based telco Axiata Group Bhd plans to launch its digital bank by end-2023 and targets to make it profitable over the next three to four years, its Chief Executive Officer and Managing Director Vivek Sood said.

Vivek said the initial capital commitment for the digital bank would be around MYR100 million ($21.69 million), and it would offer large product offerings, including deposits for current account and saving account (CASA) account holders as well as insurance products and other financial products that would be gradually launched starting end-2023, national news agency Bernama reported on Friday.

“Why we are optimistic about the outcome of the digital bank comes from the fact that there are many things we have already done which need to be translated to the bank. For example, we have done around one and a half billion in loans to micro, small, and medium enterprises (MSMEs) within our existing business within Boost Credit.

“We also have a large number of a half million active customers on a monthly basis which could potentially be the customers of the digital bank from day one. We are preparing our plans and would require the central bank’s necessary approvals before we can launch it,” he told a virtual media conference after the group’s annual general meeting, according to the news agency.

Axiata’s unit Boost Holdings Sdn Bhd, in a consortium with RHB Bank Bhd, has secured one of the five digital bank licences issued by central bank last year.

The other recipients of the digital banking licenses are a consortium led by YTL Digital Capital Sdn Bhd and Sea Ltd; a consortium led by GXS Bank Pte Ltd and Kuok Brothers Sdn Bhd; a consortium led by KAF Investment Bank Sdn Bhd which also included tech unicorn Carsome; and a consortium of MoneyLion Inc, Aeon Financial Service Co Ltd and AEON Credit Service (M) Bhd.

Vivek said the group did not foresee any hurdles for the digital bank as of now, but the whole process of launching the bank requires a thorough review and approval needed from Bank Negara Malaysia.

Last month, Bloomberg reported that Boost Holdings, a FinTech unit of Axiata, is weighing raising $50 million to $100 million in a new funding round, quoting people with knowledge of the matter.

Boost Holdings is said to be working with a financial adviser on the potential fundraising, which may give the start-up a valuation of $700 million, the people reportedly said. The funding round would help finance the expansion of Boost’s digital banking operations, the people added.

In a recent interview with TechNode Global , Boost Group Chief Executive Officer Sheyantha Abeykoon said the company will continuously expand and further embed our AI-based lending business across its holistic fintech ecosystem, spanning its all-in-one fintech app, merchant solutions platform, and cross-border payment platform.

According to him, as of 2022, Boost has accumulated an excellent track record of disbursing over MYR2.5 billion worth of loans in Malaysia and Indonesia since inception, while also recording an increase of over 70 percent year-on-year in loans disbursed across the two countries in 2022. Not only that, Boost also recorded about 90 percent repeat rate on short-term loans as of 2022.

Despite around 40 percent of its customers had never received credit from other financial service providers before, Boost maintained a healthy single-digit non-performing-loan (NPL) rate, he noted.

Boost is the regional fintech unit of Axiata, offering an all-in-one app, merchant solutions, artificial intelligence-based lending and a cross-border payment platform. It serves millions of customers across seven countries in Southeast Asia, the site shows.

In 2020, Axiata sold a 21.9 percent stake in Boost to Great Eastern Holdings Ltd, the insurance arm of Singapore’s Oversea-Chinese Banking Corp (OCBC) for $70 million, according to earlier reports. The investment valued Boost at $320 million, Bloomberg reported.

Malaysia-headquartered telco Axiata has controlling interests in six mobile operators under the brand names of ‘Celcom’ in Malaysia, ‘XL’ in Indonesia, ‘Dialog’ in Sri Lanka, ‘Robi’ in Bangladesh, ‘Smart’ in Cambodia and ‘Ncell’ in Nepal, as well as minority interests in ‘Idea’ in India and ‘M1’ in Singapore.

Axiata’s Boost to leverage ecosystem as it prepares to launch its digital bank. Here’s how and why. [Q&A]