It was a surprise when the Southeast Asian used car platform Carsome confirmed that it was part of the consortium led by KAF Investment Bank, which was among the five consortia to have obtained a digital banking license in Malaysia.
While Carsome has been tight-lipped about its participation in the tender for a digital banking license ahead of the central bank’s announcement of the winners, finance services have always been on its radar as the Malaysia-based unicorn aims to improve the used car ecosystem and the car ownership experience. for its customers.
“Providing financial inclusion through digital banking complements Carsome’s current efforts to digitize and strengthen the used car ecosystem and the car ownership experience,” said the Chief of Staff of Carsome, Aaron Kee. Global TechNode in a recent interview. “Carsome leverages technology, data and a wide area network to deliver an exceptional user experience to our customers across our business.”
Even before obtaining the digital banking license, Carsome has already collaborated with several banks, providing financial solutions to its member dealers and buyers.
And now, with the digital banking license, Carsome will be able to expand its offerings, according to Kee.
“Currently we have Carsome Capital, which operated to offer loan financing, dealer financing among other financial services. Along with this digital banking license, it allows us to expand our offering and serve a wider group of customers,” he added.
“Through digital banking, we hope to drive the business forward on all fronts and provide a greater value proposition in auto finance to further enhance the car buying experience Malaysians have with Carsome,” Kee said.
Bank Negara Malaysia announced the five successful applicants for digital banking licenses in April. The country will have three digital banks licensed under the Financial Services Act 2013 (FSA) and two Islamic digital banks licensed under the Islamic Financial Services Act 2014 (IFSA).
Malaysia’s move to issue digital banking licenses comes at a time when regulators in Asia, including Singapore, Hong Kong, the Philippines, Thailand and Indonesia, are opening up the banking sector to digital players, encouraged by penetration increased use of smartphones and better internet connections.
Central banks and consumers are hoping digital banks could bring financial inclusion to underserved segments, aided by cutting-edge technology. The demand for online banking and digital payments has also increased significantly, thanks to the Covid-19 pandemic.
Carsome, along with FinTech company Jirnexu and digital money transfer platform MoneyMatch, is part of the KAF Investment Bank-led consortium that will be accredited by IFSA.
In the interview, Kee also shared the opportunities Carsome sees in building a digital bank in Malaysia and the competitive advantage it has over others. He, however, declined to comment on the digital bank’s launch date.
Below is the edited excerpt:
How will the digital bank formed by KAF Investment Bank, Carsome position itself? What is the segment targeted by digital banking?
The digital bank, led by KAF Investment Bank, will play a role in supporting the segment where financial access is unavailable, driving greater financial inclusion, especially for unserved and underserved markets in Malaysia. Through this, we aim to democratize financial access and make it accessible to all.
Carsome seeks to work collectively with all parts of the KAF consortium to innovate and elevate the FinTech ecosystem in Malaysia. The target customer segments for digital banking are those that are unserved and underserved segments that can be better served through the effective use of technology and “high value” segments that are reasonably well served but can be better served through innovative solutions.
What opportunities does Carsome see in digital banking?
In addition to leveraging digital technologies such as cloud computing to provide seamless online banking services without the need for a physical branch, digital banking also capitalizes on human-centric and personalized touchpoints enabling the hyper-localization to provide better optimized services for customers.
In this space, Carsome envisions that greater financial access can be provided to Malaysians in their car ownership journey through innovative digital banking solutions. This will provide access to those in the market looking to purchase used cars, particularly the underserved and unserved segments that wish to secure a car, assisted in accessing the loan application through a transparent and easy to understand process .
How will the digital banking business complement or support Carsome’s existing business?
Carsome leverages technology, data and a wide area network to deliver an exceptional user experience to our customers across our business. Financial inclusion through digital banking complements Carsome’s current efforts to digitize and strengthen the used car ecosystem and car ownership experience.
Currently we have Carsome Capital, functions to offer loan financing, dealer financing, among other financial services. With this digital banking license, it allows us to expand our offer and serve a wider group of customers.
Powered by data and technology, we have now become the largest integrated automotive e-commerce platform in Southeast Asia. Through digital banking, we hope to advance the business on all fronts and provide a greater value proposition in car finance to further enhance the car buying experience Malaysians have with Carsome. .
As Carsome has previously shown its intention to provide financial services to its customers, how is the development and responses going?
Carsome offers a variety of financial services through Carsome Capital, from dealership and retail vehicle financing to Know Your Customer (KYC) and down payment.
Carsome Capital complements the existing ecosystem we have created as it is not limited to retail customers (Carsome Certified Buyers) – it also ensures our network of resellers and partners have sufficient capital to accelerate their business with our financial solution.
Carsome, in its mission of innovation in the used car ecosystem, wants to provide an end-to-end solution to consumers. We are working with various banking partners to offer financing as an ancillary service which has not always been available particularly for customers wishing to purchase used cars.
The response has been encouraging, we are able to offer a differentiated experience to our
clients. They can view, select and test the cars of their choice on site, then finalize their purchase with available financial partners who can process loan applications and approvals under one roof.
Since Carsome is in the automotive business, we assume that car loans could be one of the possible services provided by digital banking. Currently, there are many traditional banks that offer car loans, how are the car loans provided by digital banking different? What is your competitive advantage? How will the KAF-led digital bank compete with other banks/digital banks?
There are many differences between traditional and digital banks, such as the range of services and prices. Convenience, accessibility (to credit), competitive costs and loan approval rate would be some of the main advantages that a digital bank can offer. Digital banks also allow us to use alternative data points for credit scoring.
This, in turn, has broadened the target segments that can benefit from near-instant access credit without being bound by conventional restrictions.
With our unique value proposition as Southeast Asia’s largest integrated automotive e-commerce platform and our data and technology capabilities, we will act as an acquisition partner to drive financing Islamic automobile within digital banking. Our end goal has always been to promote financial inclusiveness from a vehicle ownership perspective.
Will Carsome provide similar financial services in countries/markets other than Malaysia?
Access to financial services is a major part of Carsome’s vision to create the most trusted vehicle ownership ecosystem powered by technology and data.
Expanding similar products and services to other markets is in our pipeline as we are committed to strengthening the used car ecosystem in the Southeast Asia region.
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