Why a maker of gaming tech wants a digital banking license

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In its proposal to obtain one of the full digital banking licenses Singapore will award later this year, online gaming company Razer has laid out the gaps between what traditional banks offer and young adults need.

Youthful consumers don’t immediately want the full range of banking services, but when it comes time to borrow, save and invest, they want to get credit for years of responsible spending. For Razer, which has headquarters in California and Singapore, this means tapping into the transaction history of its most devoted fans.

Razer sees an opportunity to merge the rich data it’s gathered from its young user base of 70 million with third-party financial services providers to create “the world’s first global youth bank,” Razer said Thursday. Razer has 18 offices worldwide covering the U.S., Europe and China, and is listed on the Hong Kong Stock Exchange.

Known for its high-priced keyboards, mice and headphones — and its green logo depicting three intertwined snakes — Razer has also dabbled in digital payments and loyalty. The company offers a virtual credit service called Razer Gold and a digital payment network called Razer Fintech.

Razer Pay, described as a business-to-consumer solution comprising an e-wallet, will be a core vehicle connecting Razer’s banking services, Razer said in its filing to the Monetary Authority of Singapore.

If the gaming company wins one of two full digital banking license Singapore plans to award in mid-2020, it aims to deliver differentiated services with partners including Visa, an airline, a travel agency, online lenders and tools for tracking and investing funds, Razer said in the filing.

Funding will come from five large private investment firms in Singapore who would control 40% of the company, and Razer would control the rest, Razer explained in the filing.

What separates Razer’s plans from other outfits competing for Singaporean banking licenses is the company’s narrower focus on youth, versus ride-hailing company Grab’s push to obtain a full digital banking license in partnership with Singapore Telecommunications Ltd.

Grab has said its goal is to expand from existing services in logistics and food delivery, plus reservations and ticketing for hospitality and events, to offer credit for small and midsize businesses. Grab launched in 2012 and its GrabPay wallet could form the backbone for more elaborate banking services. Grab launched its Grab Financial arm in 2018, offering insurance and financing.

Jack Ma’s Ant Financial, the payments affiliate of Alibaba, is seeking one of three Singaporean digital licenses for “wholesale banking,” which would enable it to serve corporate clients.

Razer’s youth-focused strategy could be risky because it’s limiting itself to a smaller audience that already has expanding financial services options.

A broad array of fintechs like Revolut are successfully targeting younger consumers with digital banking services for specific use cases; Revolut already has 7 million customers in 30 markets, and recently signaled plans to raise $1 billion in 2020. So far Revolut has raised about $340 million.

Razer Youth Bank will have backing from a consortium including the Sheng Siong Holdings, which is owned by two billionaire supermarket chain entrepreneurs; insurance company Pacific Century Group’s investment arm FWD; Asian internet company LinkSure Global; Carro, an online car seller based in Singapore; and Insignia Ventures Partners, a Singapore-based VC fund.

“Addressing the unmet financial needs of the large, yet underserved segment of the population through an innovative digital-first banking platform is a natural extension of our payments business,” said Lee Li Meng, Razer’s chief strategy officer and CEO of Razer Fintech, in a press release.

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Compliance Digital payments Digital banking Singapore U.S.