Welcome to Breaking Banks, the number one global fintech radio show and podcast. I’m Brett King. And I’m Jason Henricks.

Every week since 2013, we explore the personalities, startups, innovators, and industry players driving disruption in financial services. From incumbents to unicorns and from cutting edge technology to the people using it to help create a more innovative, inclusive, and healthy financial future. I’m J.P. Nichols, and this is Breaking Banks.

Welcome to Breaking Banks. I am, of course, your host, Brett King. It’s good to be back in the hosting chair.

I’ve just got off a bit of a world tour running around the place. I was in Shanghai for the Huawei Intelligence Finance Summit, which we’re going to play a really interesting interview on that coming up. But today, this is part of a show sponsored by our partner, MasterCard.

We’ve done a number of these segments and series on fintech visionaries, reimagining the future of finance around the world. And these discussions have been really fruitful and really insightful. So it’s, again, an opportunity.

And this time, we’re going to delve into what’s happening in Southeast Asia. So I think you’re going to find it valuable. But obviously, there’s a lot of fintechs that listen to our show.

If you’re looking to build, launch, and grow your business, then consider MasterCard as a partner because they help drive smarter decisions, better outcomes, enabling strong partnerships across the payments ecosystems. Obviously, tons of proprietary insights, world-class expertise, cutting-edge tech. Today, we’re joined by Bina Pothan, the Senior VP and Country Manager, Malaysia and Brunei at MasterCard, and Kaushik Chowdhury, who’s the Chief Commercial Officer at GX Bank.

Before I introduce Bina and Kaushik to the show, if you’re following what’s happening out in the region, there’s been a flurry of activity in terms of issuing digital banking licenses, sometimes called digibanks out in this part of the world. GX Bank was the first digital banking play that commenced operations just to 1st of September in 2023. So it’s great to have them to the show.

Bina Pothan, first of all, welcome to the show. And Kaushik Chowdhury, welcome to Breaking Banks. Thank you, Brett.

Thank you. Just as a brief introduction to me, Country Manager, as Brett mentioned, Country Manager for Malaysia and Brunei, been with MasterCard for the last 13 years. And in Malaysia, in Southeast Asia that we’re going to talk about for the last two and a half years.

Prior to MasterCard, had the opportunity to lead businesses across industries like banking, FMCG, and pharmaceuticals. In the current role, of course, the focus is to work very closely with partners in the BNM, government ministries, banking partners, and our merchant partners, and not to miss the fintech partners by leveraging on MasterCard’s assets. And the focus is to ensure that we advance the payment ecosystem in the country, and at the same time, deliver on MasterCard’s vision of digitizing the economy and financial inclusion for all, Brett.

That’s a great premise to be working off. We will definitely start talking about financial inclusion, how digital inclusion is playing a role in that, because I think that’s an important conversation. But thank you, Bina.

Kaushik, please, for our listeners, tell us about your role in the bank and also how you came to be in this situation as the Chief Commercial Officer. Thanks a lot, Brett, for having me. And thanks to the MasterCard team for allowing us to share our story.

So I’m Kaushik Casey, actually. So the last couple of years, I’ve been working for GX Bank as we build the bank for the first 15 months, and the last nine months, we have been operating the most exhilarating and exciting of journeys. So that’s the most exciting part of the two decades plus that I have spent in banking financial services.

So I essentially started in banking when banking was entirely analog, and bank was not written. So it used to be branches and people going and filling up forms. So we are still in that process of that transformation.

So it’s very, very exciting for me to be actually building our digital bank ground up and, you know, coming to essentially get the vision right of customers being completely mobile first to seeing that come to life right in front of our own eyes. And as we go along, right, we’ll also talk about the great partnership we’ve had with MasterCard and the traction that we’re seeing in the marketplace, which will resonate with the audience that you have, Brett. Of course, of course.

You know, being a career banker, because you’ve had 20 years in the space, you know, head of retail products and digital, previously at Standard Chart, of course, but how much more freedom do you have in terms of building really compelling experiences for customers, given that, you know, you’re starting this from the ground up? Brett, excellent, excellent question. So I will first tell you in terms of where we saw the opportunity. It’s the opportunity is very local and very Malaysia centric, right? But it is something which is happening across the world.

So when we look at it, you have to reimagine experience. You are no longer competing on products. So we will launch conventional bank products, but you will launch it with the experience layer.

And when you are trying to solve for foundational pain points, which Malaysia has in plentiful, what we figured out when we did our 4,000 odd user research is that they were telling us what we already knew. You need to go and queue up at the branch, or you need to do a digital form of an analog physical form on the banks have. Now, how do you solve it? You talk a lot about Aadhaar and the great work, and I come from India.

I saw the great work the government did there in terms of digital public infrastructure. So some of these markets, Malaysia being one of them, we do not have that repository. So that is where a digital bank can really come in and make a real difference to the users.

So what we did was we took that analog process, partnered with vendors, used a little bit of AI ML, not very cool AI, right? But generally microservices working at the back, which essentially checks for all the fraud checks on your ID, and we do a self-verification. And for the users, what happened was magic. You could onboard to a full-fledged bank relationship in four minutes for almost 90% of users.

So in fact, that foundational thing really helped us drive the traction that we are seeing. In that, the element that is required is as a digital bank, you really cannot create public infrastructure. So the consultative approach with regulators to try and go and tell them what that solution is, it will not compromise security, but will really elevate user experience, hence is a win-win, is where we will be able to get that traction going, get that, I won’t even call it innovation bread, but in terms of the X factor on experience, why users are players like us.

But look, if I’m a regulator, I want that type of experience because I know the market’s going to change. I know it’s evolving. I want to test the waters on this and make sure it’s safe before it’s ready for prime time, right? So that’s part of the beauty of the way fintech seemed to work with regulators.

So let me throw this back to you guys and let’s do a bit of sort of level setting or understand the evolution of banking in Southeast Asia and in Malaysia specifically. So I don’t know whether Bina, you want to start on this, but what is the appetite for digi banking in the region and how has it influenced the way Malaysia has gone about the digital banking license, for example? So Brett, when you talk about Southeast Asia, right, you’re talking about a population of around 700 million people. And in Southeast Asia, we have got around 600 million internet users and approximately 400 million smartphone users.

And what seen the customer behavior and expectation has changed with the advent of internet and smartphones. Today, banking customers are increasingly empowered by real time account access. They have access to accounts.

They have access to budgeting tools. If I look at what my bank offers me, I also have personalized financial insights. So and the journey, the customer journey, the customer journey of how I interact with my bank has become so seamless.

I can interact with my bank on the go. And what’s very, very critical is as digital banking and as digi banks are gaining traction in the countries, we are also seeing an increase in financial literacy, financial inclusion. I want to share some stats here.

According to World Bank Group, there has been an increase in financial inclusion from 2018 to 2022. In 2018, the numbers were 65 percent and now in 2022, it’s moved up to 75 percent. And we do believe it is because we have been able to make banking accessible to remote and underserved areas because of the digital banking bit.

So, Bina, this is in Malaysia specifically? No, I’m talking about Southeast Asia. And I also want to highlight here, if you just look at Southeast Asia, the fintech investments surpassed seven billion dollars in 2023. It’s pretty healthy.

It’s very, very healthy. And even in countries like Indonesia and Thailand, 70 percent of the population today use mobile banking apps. Coming to digital wallets, if you see Southeast Asia, lots of activity on the digital wallet space.

Transaction value on e-wallets alone is projected to exceed one trillion dollars by 2025. So, these numbers prove that, you know, digi banking, digital as a way of interacting with my financial institution is going to be a table stick. So, when Kaushik talks about experience, right, I don’t think it would be restricted only to digi banks, but even the conventional banks.

This is something that will be that they need to offer their customers, the customers expected payments. Even within Malaysia, payments are getting invisible. I don’t wake up in the morning thinking I need to make a payment.

Payment has become, by the way, for me, when I take a cab or a grab, I don’t really think of making the payment. It just happens when I order my food. It just happens.

It’s not an active engagement with my financial institution when I do that. That’s the best form of financial services, right? Just integrate into your life that makes your life easier. Not just something that makes you have to jump through hoops.

Yeah, absolutely. No, I think that’s great insight. Thank you, Bina.

So, Kaushik, you, of course, are part of, you know, Bina actually mentioned grab during the conversation, which I use constantly when I’m in Thailand. And, of course, part of your foundation as GX Bank is you have, as a parent company, GXS, which is one of the digital banking licenses that were issued in Singapore a couple of years ago now, which is a grab and Singtel consortium or JV. So how much of the influence of what’s been happening in places like Singapore and elsewhere have come into, you know, from a design perspective or an operational perspective for the bank? Thanks for that, Brett.

So, absolutely. We are very proud to be part of and backed by Grab, which is the region’s leading super app that, you know, it moves Southeast Asia forward. So one of the vision of Grab and Grab is not just about, you know, for the user, it’s about booking the, you know, booking the car or, you know, delivering food.

But there is another part of Grab, ultimately, because it’s a marketplace, it’s all about making all parts of the marketplace work. So one of the real vision of Grab is to make access, right, access to income for our driver partners, for our delivery partners. And that’s what that what that that’s exactly what was the genesis of Grab wanting to get into banking.

Because the founders of Grab deeply care, you know, about giving that financial access, right, to underserved segments and the gig workers. So that’s actually the genesis of why Grab got into banking. So that’s a that’s a very, very noble, you know, long term sustainable cause, which basically triggered them to get into banking.

So we have that purpose. Now, coming back to how we are, how this is playing out, a lot of Malaysians are actually underserved. You might be middle income because your existing banks are bred, you know, it’s actually still bank 2.0 days.

They’re not really fully mobile first. So those we call them that entire population, we call them underserved and, you know, and not really unbanked. So you can serve them better because inclusion is also means access to credit, even with the amount of data that we have, which is ecosystem.

Interesting. Yeah, it’s yeah, there’s these terms underbanked, unbanked and so forth. Australia and the UK have taken, calling this a little differently now, they call people financially vulnerable customers, right? Lower and lower income segments, you know, particularly one of the problems, you know, as you look at studies like, for example, the Financial Health Network studies and so forth, the cost of doing banking when you’re in lower income groups is much, much higher than doing banking as, you know, as someone who’s in the, you know, is a mass affluent customer, for example.

So I think that’s a that’s a key driver. One of the advantages, of course, digibanking brings to this is we know that digital banks are much more operationally cost efficient. So therefore, they can serve these underserved customer groups.

So what do I just call them? The vulnerable customers, you know, without the same economic considerations of traditional players. So I think that’s pretty cool. Bina, let’s focus on the MasterCard relationship for a little bit.

We’re obviously going to dive a bit more into that. But talk to me about how you see your role in enabling financial inclusion and financial access through fintechs and digital banks. So we do multiple things in the country and as well as globally bred.

So I just want to bring to life some of them. When we talk about financial inclusion, recently MasterCard partnered with the Asia Foundation in Malaysia to try a non-profit organization which participates in financial inclusion within a country. MasterCard has invested one million dollars to ensure that we have more than 100,000 women entrepreneurs in Malaysia into the digital fold.

So we are working very, very closely with women’s development ministries as well as the Asia Foundation in Malaysia to focus on financial inclusion for women entrepreneurs by digitizing them. That’s one aspect of it. The other bit that I also want to share is that we have world-class fintech programs, whether it is Startpath, whether it is Engage, whether it is Fintech Express.

We help them leverage data. We provide our partners with the valuable data and insights and analytics to help them understand market trends and consumer behavior. We also work very, very closely with these fintech partners so that they can be integrated with our banking partners to provide the solutions so that the end goal is to foster a more inclusive digital economy that benefits all.

So and if you look at globally, MasterCard has been the leading scheme when it comes to successful fintech and digibank stories worldwide. I want to give you some examples. We have the example in South America with Nubank, where we have surpassed 100 million customers, becoming the third largest bank in South America, serving more than 50 percent of Brazil’s population.

Closer to home in Asia, we’ve got Kakao Bank, where the digital bank, which is known for being the fastest digital bank to break even in the history in AP and I would possibly assume worldwide in less than two years. And of course, closer to home, you know, the work that we’re doing with GX Bank, which stands out most because we do believe that the digital banks have an opportunity, as Kaushik mentioned, to serve the underserved in the country. And that exactly is the aspiration of the Central Bank of Malaysia as well.

Very cool. Well, you know, I mean, this is an exciting opportunity for digital. Of course, we have to talk about digital inclusion if we’re going to get to financial inclusion and so forth as well.

But we maybe get into that. Kaushik, you’ve commenced operations now. It was September 2023.

Is that correct? So that was our that was our actual operational license. But we went public live when we opened up for public. It was in November.

Okay, in November. Well, that’s great. So you’d been obviously working on getting the stack ready and the platform ready before the license was confirmed because the license process takes some time.

And, you know, there’s a lot happening in the region in terms of digital banking activity. But what exactly are your ambitions in the space? What does GXBank hope to accomplish? So let me begin by telling you, Brett, about the amazing traction that we have got, thanks to partners like Bina and the MasterCard team. So essentially, we opened for public in the month of November, end November.

So we are one year old and we have more than 750k users on boarded. Congrats. We issued, you know, as Bina mentioned, we partnered with MasterCard to issue our debit cards.

We’ve got more than half a million cards already. One of one of the midsize issuers already in the market. So those user numbers gives us great confidence that we did manage to solve the foundational pain points that I was talking about when we started our conversation.

What gives us even greater confidence is something you will love, Brett. So essentially, you can be a store value or you can have payments utility. As a digital bank, it’s very clear to us in terms of strategy is that we want payments utility.

We don’t want users to only use e-wallets because in the region and in the country, there are enough e-wallets. So we need to make that habit forming behavior without saying that we want to be primary because you need to do a lot more and you need to be a mature bank to actually be a primary bank. So we are very clear.

We are modest and humble to know that we cannot be primary today. But getting users to adopt to use GX Bank’s payment products is very, very core to our strategy. And the traction that we see on people using us on a daily monthly basis is just amazing.

It will be the traditional FIs will be jumping up and down if they know our numbers. So that gives us a lot of confidence. So we have QR now, which is a big platform across Southeast Asia.

Obviously, we’ve got PromptPay here in Thailand, where I am, and we’ve got DoItNow, which is QR based in Malaysia. But what other payments activities are you focused on specifically? Three actually, Brett, right now in our current stage of evolution. We absolutely have the GX card, which is the MasterCard product.

That’s our top product. We have QR. Merchant presented QR is taken off a lot, as Brett, you mentioned across the region.

Malaysia is no example. That’s something which is becoming very, very popular. The third one is unique to GX Bank and us, which is our differentiation.

We also see an increasing trend of customers linking the GX product on for their everyday everything payments on Grab. So that’s what you talk about in your Bank 4.0 in terms of embedded banking. Very early days, we only see double digit linkage rates, but that’s the promise of where we can go with this three to five years from now.

Well, I think this is clearly changing the dynamic of the way we think about payments, cross-border payments and so forth are all part of that as well in the space. So it’s great to see some focus on that. In terms of sort of your milestones and so forth, where do you hope to be in the next couple of years? So next couple of years, absolutely, my shareholders will love it if I say that we need to be profitable.

So we have obviously learned from the first wave of digital banks. We understand that going multi-product is the way to actually have sustainable profitability. And we don’t have a decade, right? Like some of the first set of new banks to actually, you know, start with the narrow use case, right? And have that customer acceptance and then build scale and then profitability over a decade.

So in the next two, three years, we are hoping to break even. With our current traction, if we are able to convince BNM that we are safe, which we are, and we are getting so much of user love, and if they lift some of the limitations that they have imposed initially on the digital banks, then we really have aspirations and ambitions to be a top 10 bank here in the next five years. So when you talk about BNM, you’re talking about the regulator, Bank Nagara Malaysia, right? Yes, Brett, yes.

Yeah, just so people listening are clear on that. Bina, you know, this is pretty aggressive growth, 750,000, you know, customers in a very short period of time. How do you go about supporting that type of growth, you know, in tandem with these goals that GxBank has, and of course, the regulatory constraints? So Brett, I must highlight here that it’s not only just the aggressive customer numbers, but in Grab, Mastika did find extremely talented partners as well.

I have to give it to Kaushik and Faisy and the team at Grab GxBank as well. I want to highlight here that the go-to-market launch with GxBank was one of the fastest that we have seen. We were out there in nine months with a CASA and debit card product.

So I must say that it was a lot of work, collaboration was the key. It was the fastest Digibank launches, if I’m not mistaken, in Asia-Pac and possibly globally. We did deploy dedicated teams of MasterCard consultants at GxBank to ensure that we had smooth and quick execution right from the start.

We provided comprehensive support covering all stages from ideation to launch to product design to operational excellence. Of course, based on our experience in other geographies, what is a good customer experience? I have to highlight here that we are committed to supporting GxBank’s expansion. Of course, the key focus continues to be financial inclusion and seamless banking for Malaysian customers.

Awesome. Koushik, what’s the toughest thing in starting a digital bank like this, do you think? The toughest one, right? I could have given you five, right? Well, give me five. It’s fine.

No, so I think the toughest one is actually… So we say tech for good, but it’s not just about design and what’s your UI, which also we have in Plentiful. Ultimately, the toughest part is to get the people right, right? So when I say people, it’s not just the people who are coding or the people who are writing your user stories, your product managers. You absolutely need them, but you need the entire crew.

So the difference, and I remember you were asking me this when we started our conversation, right? Actually, the tech is available to everyone. It’s all about the culture. It’s all about the impact.

It’s all about handpicking people who believe in that impact, who want to make that change in their home market that it’s already happened. It’s not that anything that we’re doing here is absolutely a ground up new thing, but most of it are customized for the local market. So having that passionate crew, getting them together is tough.

And then to Bina’s point, we also know it is not possible to actually do this on your own. So the partners you choose is critical to your success. So we obviously have MasterCard here, but beyond MasterCard, there are a bunch of partners who made that tech possible.

So choosing your partners carefully, if you don’t choose it right, it is almost the difference between success and failure. And the last one is essentially having the pragmatism and also the practical thing about how do you do the trade-off between experience and risk. Essentially, all ideas are good.

The ones which become great are the ones which have that balance right. Ensuring that you’re able to get your X factor out without compromising on a basic trust that users have about the bank is, I think, a very, very tough challenge. So those three, Brett, will be the three top ones I will pick.

Awesome. No, that’s very helpful. Bina, in terms of the work you’ve done across the region with Digibanks, what are some of the key drivers for success that you see in this model? So Brett, when it comes to Digibanks, right, I mean, our key lessons learned from our work that we have done with banking partners here, innovative financial solutions to differentiate yourself versus the conventional banks, super critical.

But also one of the critical aspects of when it comes to digital banking is security. It is the key concern. When you talk to end consumers, the trust factor is possibly super critical as well.

So a robust security is essential to safeguard digital transactions. And this is what a regular customer looks for because he or she is possibly banking with a conventional bank for a really, really long time. So they need to have the sense of comfort that what you’re offering is secure.

The trust will not falter. And that’s super critical. So for me, what’s important is that the customers should feel the comfort that their data is handled safely.

There shouldn’t be worries around privacy, security when they’re using a new digital partner. Yeah, that makes sense. Yeah.

Kaushik, you’ve referred to Grab a few times in the integration there. That partnership has obviously been really material in terms of your success. Is that a fair statement? Absolutely fair statement.

So one of the really interesting opportunities we see with platforms like Grab and others is the opportunity for merchant services and things like that. So is that part of your focus as well? Yes, Brett. So one of the things that we’re working on now in terms of our roadmap is actually giving access to credit to all SME and micro SMEs.

It’s something that Grab does because we run a two-sided marketplace, right? So that’s something fundamental to Grab. And we are going to take that advantage of the data that we have and the flows that we have and extend credit to micro SMEs and SMEs. We are looking at that.

But to be fair, Brett, I spoke a lot about ecosystem and the advantage. To really paint the correct picture for you, we actually think that we are at a 30-40% of where we can be. Because today we use the ecosystem to drive discovery.

So we are getting our cost of acquisition lower because we are embedded in Grab. We are driving that linkage and that payment behavior of people using the GX account to pay for Grab services. But those are still foundational problems to solve.

In the future, our real aspiration will be, along with Grab, to actually think about the common user, right? Brett uses Grab and Brett also uses GX. Hopefully, we will file in someday. And how we can work together, how can we solve for stuff which only we can solve for across the region? So that’s where we want to get to.

Interesting. Exciting. So if you want to check out GXBank, you can go to gxbank.my for Malaysia and check out what they’re doing.

Visually, stunning app. You’ve done great work there, Kashik. But again, I actually think, Bina, in terms of your comment earlier, I think that trust is changing.

I think trust is being wrapped in utility and not in banking licenses. And I see this happening around the world where people see these new customer experiences and that gives them a feeling of strength and comfort because this is the latest tech. It has to be good at helping me, especially if I’m getting financial insights and things like that as well.

A bank that helps me save money? When was the last time a bank did that? And that’s really the opportunity with this sort of behavioral model embedded or integrated into customers’ lives. So I’m pretty excited to see how this evolves for you guys. So Kashik, you know, we will need to get you back on in a year or two and get an update for this and sort of see how this is going.

So Kashik, before we head off and Bina as well, get ready for this. So Kashik, where can people find out more about you specifically? You use LinkedIn? I use LinkedIn so people can find me on LinkedIn. That’s my preferred mode of contact.

Okay, great. And Bina, what about yourself? LinkedIn too, Brett. Okay, great.

And then if you’re interested in learning more about how MasterCard services can help you as a fintech, help you with innovation, then make sure you check out mastercardservices.com slash industry slash fintech. We’ll put that link in our social as well so you guys can check that out. Thank you both for joining us on Breaking Banks today.

Thanks so much for having us, Brett. And thanks a lot for the MasterCard team to get us together. Thank you.

Absolutely. That’s it for another week of the world’s number one fintech podcast and radio show, Breaking Banks. This episode was produced by our US-based production team, including producer Elizabeth Severance, audio engineer Kevin Hirsham, with social media support from Sylvie Johnson.

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