Gaming firm Razer exploring bank license applications in Europe and the U.S.

Key Points
  • "Singapore is not the only jurisdiction we're looking at," Razer CEO Min-Liang Tan told CNBC. "We're also exploring in Europe; exploring in the U.S."
  • The company leads a consortium called Razer Youth Bank, which submitted an application for a virtual bank license in Singapore at the start of this year.
  • Razer would face heavy competition in Europe and the U.S., from both established lenders and fast-growing "neobanks" like Chime and Revolut.
Tan Min Liang, the co-founder, CEO and executive director of Razer, at a press conference on the proposed listing of Razer at JW Marriott Hotel Hong Kong in Admiralty.
Dickson Lee | South China Morning Post | Getty Images

LONDON — After applying to become a regulated bank in Singapore, gaming hardware firm Razer is now considering similar moves in Europe and the U.S. 

"Singapore is not the only jurisdiction we're looking at," Razer's co-founder and CEO, Min-Liang Tan, told CNBC in an interview this week. "We're also exploring in Europe; exploring in the U.S."

While it might seem unexpected for a company that specializes in gaming peripherals to show an interest in financial services, Tan believes the move makes sense. Razer, a well-known brand in the competitive esports scene, has been pushing deeper into financial technology with its own virtual credits for gamers and a digital payments division.

The Irvine, California and Singapore-based company currently owns 60% of a consortium called Razer Youth Bank, which submitted an application for a virtual bank license in Singapore at the start of this year. Other applicants to the scheme included Jack Ma-owned fintech giant Ant Group, ride-hailing firm Grab and telecommunications group Singtel.

Tan says that, in emerging markets, many consumers "don't even have a bank account, let alone credit card" — 1.7 billion people globally are "unbanked," according to the World Bank, meaning they don't have access to an account at a financial institution. Razer is also looking at expanding its banking business across Southeast Asia, India and Latin America.

"We've got a vision of a global youth banking network, designed for the youth right from the get-go," said Tan. "Pretty much like we did with the gaming industry, we're looking to do it with the youth perspective in mind."

Razer's European and U.S. banking ambitions are still in the early days. But it suggests the company is in it for the long haul with its vision to tackle the centuries-old industry and challenge lenders both big and small. Still, it would face an uphill battle, given the level of competition in both regions.

A wave of so-called "neobanks" have popped up over the years offering no-fee checking accounts that can be managed entirely through an app. Such start-ups have grown considerably, with the likes of Chime and Revolut for instance attracting millions of customers and multi-billion dollar valuations.

Razer wants to create a global digital bank for young people, CEO says

Plus, applying for U.S. bank charters has proven a difficult task for the upstarts. San Francisco-based neobank Varo Money only recently got a national license, after three years and multiple rounds of applications. Other fintechs, including international ones, rely instead on partner banks to hold customers' funds.

"I don't think at any point in time with banking regulators it's ever been easy," Tan said. "But we want to do this properly. Today we are regulated in many global jurisdictions with e-payment and e-money licenses. It's something we're very comfortable with, and we're taking a long-term approach."

Like many gaming companies, Razer has flourished this year as consumers have spent much more time at home due to the coronavirus pandemic and resulting lockdowns. In its first-half results, Razer said revenues grew 25.3% to a record $447.5 million year-on-year, while it trimmed net losses to $17.7 million.

Revenues from services grew 79.3% to $64 million, while total payment volume within its fintech unit more than doubled to $1.8 billion. The Hong Kong-listed firm's shares are up nearly 23% since the start of the year. Razer said the outcome of its Singapore bank license application is expected to be announced in the second half of 2020.