Home Refractory Same-day loan disbursement is part of Paramount Corp’s digital banking strategy

Same-day loan disbursement is part of Paramount Corp’s digital banking strategy

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SHAH ALAM (March 4): Real estate developer Paramount Corp Bhd has finally announced its digital banking plans, which include same-day loan disbursements and embedding banking products in real estate transactions, since applications for the five digital banking -Bank Negara Malaysia (BNM) licenses are entering the final stage of approval.

At a news conference here on Friday (March 4) in conjunction with Paramount’s recent financial results announcement, Jeffrey Chew Sun Teong, the group’s chief executive officer, said the group, working with underwriters, has been keeping the digital banking plans under wraps The consortium knew there was strong competition for BNM’s five digital banking licenses, due to be issued in March 2022.

“We like to think of the banking of the future as a fully digital bank. No paperwork from the customer is done on paper, and everything from the bank’s front office to the back office and the customer – all fully digitized.

“Processes are designed in advance, so the cost of running the business – excluding branches, offices and labor – would be significantly reduced because the processes are all simple products, so loans don’t have to be traversed company-wide [before being approved]’ Chew said.

The lower cost base allows digital banks to operate with a lower cost-income ratio of 20%, compared to the banking industry average of 50%, according to Chew.

He said Paramount envisions a future where loan approvals are pre-approved without potential borrowers showing up at physical bank branches.

“We know your data, we know yours [credit] scores. Immediately when you apply, the money is paid out the same day,” he said.

Chew also detailed Paramount’s digital banking strategy of embedding banking products in real estate transactions.

As an example, he cited that a recent graduate who is planning to rent an apartment but doesn’t have the money to pay the three-month deposit for the rental accommodation, along with utilities, may not need to pay up front because those expenses will be embedded instead into the monthly rent for the apartment.

Looking ahead, Chew said Paramount is poised to commit more than RM100 million to fund its digital banking business over the next three to five years.

In response to reporters’ questions about whether the company has the funding for its digital banking ambitions, he said Paramount plans to divest assets in the coming years to raise money to fund digital banking project of the group can be used.

“There is some (asset) monetization in the pipeline related to our (educational) campuses as well as stocks [in or investments],” he said.

As applications for BNM’s five digital banking licenses move into the final stages of approval ahead of the central bank’s announcement of successful applicants in March 2022, Chew said Paramount is now ready to share its digital banking strategy.

When asked if Paramount is confident of getting a digital banking license from BNM, Chew said he sees a more than 50% chance the group will get one with the help of consortium partners.

On June 30, 2021, Paramount announced that it had submitted an application that day to BNM for a digital banking license as the lead applicant for a consortium of Paramount, Star Media Group Bhd, Prosper Palm Oil Mill Sdn Bhd, RCE Capital Bhd and a technology partner .

“The main objective of the proposal is to leverage the vision, strength and experience of the consortium partners to build a digital bank that promotes financial inclusion and empowerment to empower Malaysians for a better future, particularly the underserved and unserved communities who are faced with finance hardships.

“The application is also consistent with Paramount’s five-year strategic plan (2020-2024) to identify new revenue streams, particularly in digital, following the divestiture of the group’s education business and for long-term sustainability,” Paramount said in a statement to Bursa Malaysia.

On Friday (March 4), Paramount’s share price rose 0.5 sen, or 0.7%, to 71.5 sen for a market value of approximately RM442.73 million, based on the company’s 619.2 million shares outstanding.

Net assets per share last reported by Paramount was RM2.32.