The consortium is going big with its dream of meeting the underserved youth’s financial needs globally.
In a sea of digital bank license applicants targeting small and medium enterprises (SMEs), Razer Fintech’s virtual-only bank proposition is looking ahead to the future with its aim to service the millennial generation globally.
Along with its partners, namely retailer Sheng Siong Holdings, insurer FWD, internet company LinkSure Global, venture fund Insignia Ventures Partners, and vehicle marketplace Carro, Razer Fintech announced their bid for a digital full bank license this January. Should they be granted a license, the consortium plans to create the world’s first global youth bank, aptly named Razer Youth Bank.
The proposed lender will make use of Razer’s background working with the younger generation, Razer Fintech’s payments system, and the parent company’s years of experience working on the highly competitive and fast-changing field of technology and gaming.
“The key differentiation factors that will ultimately be compelling to our target demographic are really Razer’s strong brand affinity with the youth and millennials and our deep understanding of this demographic,” says Li Meng Lee, chief strategy officer of Razer and chief executive officer of Razer Fintech. “This will allow us to create exceptional user experiences as well as introduce customized financial services solutions that will address the needs of our users.”
“This will also enable us to create a virtuous cycle to sustainably bank the underserved youths through a cost-efficient user acquisition model, to also engage, to educate, to maintain user stickiness and ultimately leverage on our users to advocate other segments of the population to adopt our digital banking proposition,” he also noted.
Asian Banking & Finance and Singapore Business Review spoke with Razer’s Lee to learn more about their virtual bank proposition.
Should the Monetary Authority of Singapore (MAS) grant you a digital bank license, Razer Youth Bank would be the “world’s first global youth bank," so to speak. What will make your bank attractive to the youth?
A 2018 study by E&Y found that only 29% of millennial respondents had a “great deal” of confidence in banks and financial institutions. We noticed that the youth feel that current financial products or services are not tailored for them, and that new financial products and services lack innovation to address experiential youth lifestyle.
Razer’s global presence and strong brand authenticity with the global youth and millennial population that we built up over the years are what sets us apart in our fintech strategy. According to Newzoo, over 70% of millennials are gamers. Over 80% of our 80 million registered users are under the age of 35.
Razer Fintech, our financial technology arm, continues to generate robust traction and has grown to become one of the largest offline-to-online (O2O) digital payment networks in Southeast Asia. In 2019, Razer Fintech recorded a strong 50% year-on-year growth in total payment value of US$2.1b.
We believe that addressing the unmet financial needs of the large, yet underserved, youth and millennial segment of the population through an innovative digital-first banking platform is a natural extension of our payments business.
We will continue to leverage on Razer’s strong brand affinity with youth and millennials to drive adoption, a deep understanding of the lifestyle needs of the youths to be able to customize products relevant to their needs, and an extensive technology and fintech expertise to deliver exceptional user experiences. Together with our open banking platform and ecosystem approach of collaborating with best-in-class industry leaders and lifestyle partners, these will enable us to create and deliver highly innovative and bespoke financial services solutions to address the lifestyle needs of youth and millennials.
Could you walk us through how a ‘global youth bank’ could have an edge over other retail banks?
Razer Youth Bank has a clear value proposition of serving youth and millennials and the associated startup businesses.
In light of the massive growth of our financial services business and coupled with our global brand, reach and user base, we intend to build Razer Youth Bank regionally and globally.
Razer is a global youth brand with a deep understanding of this segment and we aim to translate this understanding of the segment into an attractive banking proposition for youth and millennials by addressing their key needs via innovative use of technology. For example, our partnership with FWD will allow us to offer targeted insurance products to the clients which best suit their needs. With our brand authenticity, we are able to attract, retain and create trust with the youth and millennials.
With innovative use of technology with a cloud-based, open and scalable architecture, it will allow us to collaborate with best-in-class technology and lifestyle partners to continuously evolve and customize our product offering for the youth and millennials.
The use of innovation and digital approach allows us to operate the bank in an asset-light model which will result in significant cost efficiencies as compared to a traditional bank that operates physical branches with manual processes.
Most importantly, Razer Youth Bank will grow as our target users mature, providing an expanded set of functionality and empowering financial independence as the financial needs of our users evolve as they progress through the various phases of their life.
Why is it the right time to apply for a digital banking license?
Razer’s vision has long been to serve the lifestyle needs of the youth and millennials. We started this journey by creating Razer Gold, one of the world’s largest virtual credits platforms, affording the youth access to games and entertainment. Razer Fintech, is a direct extension of this endeavor. Razer Fintech has grown to become one of the largest O2O digital payment networks in Southeast Asia and has processed over billions of dollars in total payment value.
We envision addressing unmet and underserved financial needs beyond the ambit of purely payments accessibility; our innovative digital-first youth banking platform is a natural and intended extension of the existing Razer Fintech business.
As the leading global youth and millennial brand, alongside our understanding of the banking challenges for the youth, we aim to create a banking experience that is an integral part of the youth and millennials’ lives: their learning, playing, traveling, entrepreneurship or daily lives.Our execution strategy is to incorporate functionality from various best-in-class partners to create this experience, and collectively reduce the number of underbanked and unbanked youth and millennials globally.
Obtaining a full digital banking license would be critical in enabling Razer to achieve the above vision as it provides us with the necessary base to deploy our intended financial services in the youth and millennials’ lives.
In the meantime, we are also assessing similar opportunities in other geographies.
What are the unmet financial needs of the millennials and Gen Z that Razer Youth Bank can address? Compared to the traditional banks, how could you address your target market’s pain points?
According to surveys from different research organizations, we noticed that there are multiple challenges faced in financial planning across the spectrum of youth and millennials such as lack of control over personal financial management, challenges with repaying and accessing credit, as well as lack of knowledge to grow wealth.
In addition, students and young professionals are segments of the population with an active lifestyle who are the largest users of ecommerce platforms for online shopping, adopters of digital payments and are increasingly impassioned about sustainability. However, in spite of these lifestyle habits, a lot of them view interactions with banks as purely transactional and often criticize the inability to make seamless digital payments for their daily lifestyle needs.
We are hyper-focused in meeting all needs of the youth and millennials and the associated startup business.
The key differentiation factors that will ultimately be compelling to our target demographic are really Razer’s strong brand affinity with the youth and millennials and our deep understanding of this demographic.
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