KUALA LUMPUR: Raiz's fall just four-years into operations could be due to the lack of allure for micro-investing in a developing economy such as Malaysia.
"Investment, like any financial services, is not a "bought product" that you can pick and put into a cart," Areca Capital Sdn Bhd CEO Danny Wong told Business Times.
He said many services and investments require an explanation and deep understanding of the risk and reward.
"Moreover, only fewer informed investors may choose to do direct investment. In short, in a developing economy including Malaysia, micro investing may be still at early stage," he added.
Malacca Securities' research head, Loui Low on the other hand thinks its a highly competitive game for micro investing in Malaysia with more than five to eight of them in operations since Raiz launched as the first to offer in 2020.
He said the elevated inflationary environment could have also made it harder for the target group to fork out the money for micro-investing.
Micro-investment platforms like Raiz advocate investing loose change from everyday purchases in unit trusts via its app.
"Hence we believe the education may not be adequate to support (it), or the highly competitive environment has contributed to the exit of Raiz," Low told Business Times.
In a filing with the Australian Securities Exchange (ASX) last Friday, Raiz Invest Limited said Raiz Malaysia Sdn Bhd, a joint venture between Raiz Invest and PNB, will cease operations here following a strategic review of its business.
Raiz Malaysia is operated as a JV with Jewel Digital Venture Sdn Bhd (JDV) and Raiz Invest Australia Limited, a wholly owned subsidiary of Raiz Invest Limited (Raiz Invest).
PNB launched,Raiz, Malaysia's first micro-investment mobile app in July 2020, as part of its organisational transformation journey in which digitalisation is a key enabler.
It was to provide unit holders with a convenient platform to proactively save and invest in Amanah Saham Nasional Bhd (ASNB)'s unit trust funds, and initially available exclusively for Maybank account holders.
Raiz uses users' virtual spare change from rounding up everyday purchases to proactively invest into ASNB's variable price funds based on personalised investment portfolios.
Apart from this round-up investment, users can choose to invest using lump-sum investments as well as recurring investments.
It was launched by then PNB group chairman, Tan Sri Dr Zeti Aziz, and then PNB group president & CEO, Ahmad Zulqarnain Onn.
"Raiz Invest has previously advised that a strategic review of this busines was underway and following completion of that review, the JV partners have agreed to close the business," it said in the filing.
Raiz Invest said the Malaysian entity has sufficient capital to fund the expenses relating to the closure with its joint venture company JDV having previously committed a further RM3 million to ensure a structured, coordinated and timely wind down process.
"A comprehensive and orderly closure process will be implemented in phases to ensure the secure and efficient handling of client assets," Raiz said without providing a timeline for the closure.
The exit will not impact the profit and loss of Raiz Australian operations, and Malaysian operations will be classified as discontinued operations in its financial report.
"The decision to close the Malaysian operations will enable Raiz to focus on strengthening and expanding its Australian business. With our continued product innovation and our marketing campaign, we are confident the Raiz Australian business will continue to grow and deliver strong economic performance for shareholders. On behalf of the board, I would like to thank our partner for their role in the JV partnership over the last four years," said Raiz managing director and chief executive officer Brendan Malone in a statement.
Raiz Invest and PNB have not responded to questions from Business Times as at press time.
As at time of writing account holders have not been notified of the plan to shut operations.