KUALA LUMPUR: Aeon Credit Service (M) Bhd and Aeon Financial Service Co Ltd have formed a joint venture to undertake the business of a digital Islamic bank.
The joint venture company, which is ACS Digital Bhd, was incorporated by Aeon Credit on July 19, 2022 to undertake the digital banking business with an issued share capital of RM10,000 comprising 10,000 ordinary shares.
ACS Digital will start operations within 24 months from April 8, 2022, subject to the fulfillment of the licensing conditions stipulated in the approval letter and Bank Negara Malaysia's satisfaction.
The two companies will ensure that ACS Digital complies with the condition imposed by the Ministry of Finance (MoF) for at least 30 per cent of the shares in it to be held by Malaysian shareholders, with priority given to Bumiputera shareholders.
They will also deploy their combined expertise in providing financial services and solutions to customers, especially from the underserved and unserved market segments, adding dynamism to the banking landscape and contributing to the financial inclusion agenda in Malaysia.
Aeon Credit said ACS Digital intends to leverage on Aeon Co Ltd of Japan and its subsidiaries (Aeon Group) retail network in Malaysia to elevate the banking experience of target segments by offering a broader range of financial services and products of Aeon Credit group.
"Aeon Credit also expects that the proposed JV would enable the Aeon Credit Group as a whole including ACS Digital to have access to lower cost of funds via the deposits from the latter's customers," it said.
The total investment outlay by the Aeon Credit and Aeon Financial and eventual share capital for ACS Digital is estimated to be RM550 million during the foundational phase of up to five years from the commencement date of the digital banking business.
AEON Credit expects that ACSD would be able to develop a sustainable business model and achieve profitability in operations before the end of the foundational phase.
The prospects of ACSD are dependent on the reception of digital technology by the underserved and unserved segment (e.g. gig economy workers or rural residents).
"Aeon Credit believes that given the strengths and capabilities of ACSD shareholders, ACSD is well-positioned to capture the market opportunities.
"Barring unforeseen circumstances, the proposed JV should bode well for the future prospects of Aeon Credit Group," it added.