The CIMB unit, Touch 'n Go Sdn Bhd, will be majority shareholder and Ant Financial a minority shareholder, the bank said in a statement filed at the Kuala Lumpur stock exchange.
"The capital injected by both parties will go towards the creation of a world-class online and offline payments provider, delivering superior mobile wallet solutions and other related financial services," CIMB said in the statement.
Millions of Malaysians use 'Touch 'n Go' cards daily to pay for road tolls, bus fares, parking and shopping. The envisaged mobile wallet will allow these users access more services on mobile phones, said the statement.
Alipay users currently use e-wallet services on mobile phones to hail taxis, book hotels, buy movie tickets, pay utility bills, make doctors appointments and manage their finances.
For Ant Financial, an affiliate of Alibaba Group Holding Ltd, the investment would be its first in Malaysia. Its association with CIMB is likely to advance the bank's plans to build an early lead in the country in so-called fintech.
After growing into multi-billion dollar companies, Chinese financial technology (fintech) and internet firms including Ant Financial, Lufax and Tencent Holdings Ltd are moving into Southeast Asia and beyond in search of more customers.
Ant Financial last year bought a minority stake in Ascend Money looking to benefit from the Thai company's presence in six countries, including Indonesia, Southeast Asia's most populous.
"To bring digital financial inclusion to more people across the world, Ant Financial takes an approach of collaborating with strategic partners overseas and enabling them with its innovative solutions," Ant Financial Chief Executive Officer Eric Jing said in the statement.
Digital payments firms are looking to tap the more than 370 million people without bank accounts that use cash on a day-to-day basis in Southeast Asia to offer lending and other financial services.
Tencent has applied for a license in Malaysia to offer local payment services via its popular WeChat Pay, while Lufax announced plans to launch its wealth management platform in Singapore
CIMB Group Holdings Bhd, Malaysia's second-biggest bank, on Monday said its subsidiary will form an equity joint venture with Ant Financial Services Group, the parent of Alipay, to provide mobile wallet and related financial services