DIGITAL BANKING SECTOR BOOMS IN 2024 WITH ADVENT OF NEW DIGITAL BANKS

KUALA LUMPUR, Dec 8 (Bernama) – The three digital banks in Malaysia have revolutionised the banking sector, offering financial access to the underserved and convenience to customers who are able to undertake banking transactions anytime of the day and night.

Since they began operations, e-payment transactions have also chalked up a phenomenal increase within a relatively short period of time beating expectations and projections.

In the process, they have increased the adoption of digital payments with the implementation of regulatory measures aimed at enhancing financial inclusion.

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They have added a new dimension to banking, not only in enabling accessibility to a wider clientele but raising financial literacy especially for the underserved communities.

Three of the five digital banking licences issued by Bank Negara Malaysia (BNM) in 2022 — GX Bank Bhd, AEON Bank (M) Bhd and Boost Bank Bhd — have successfully been launched.

GXBank, a subsidiary of GXS Bank Pte Ltd — a digital bank joint venture between Grab Holdings Ltd, Singapore Telecommunications Ltd and a consortium of Malaysian investors, including the Kuok Group — was launched at the end of 2023.

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This was followed by the 2024 launches of AEON Bank, jointly owned by AEON Financial Service Ltd and AEON Credit Service (M) Bhd, subsidiaries of Japan's AEON Group, and Boost Bank, a homegrown digital bank established by Axiata and RHB.

The other two digital banks — one a partnership between Sea Ltd and YTL Digital Capital Sdn Bhd, and the other headed by KAF Investment Bank — have not yet gone live due to technical issues.

Accelerating digital banking transformation

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim's expectations of digital banking has also been realised as the target of 400 e-payment transactions per capita was achieved in a much shorter time than the original timeline of 2026.

As of Oct 1, 2024, 405 digital payment transactions were recorded, exceeding the goal outlined in the Financial Sector Blueprint.

This undoubtedly reflects Malaysia's progress in digital payments.

While it has accelerated the transformation of Malaysia’s digital banking sector, it nevertheless needs to remain competitive with regional peers.

Technological advancements and competition aside, digital banks must prioritise the public’s interests to ensure long-term sustainability.

This entails raising public awareness and understanding of digital banking to encourage greater adoption.

Boosting industry collaboration

On Nov 6, 2024, the Association of Banks in Malaysia (ABM) welcomed GXBank and Boost Bank as new members, marking a pivotal moment in increasing players in the banking sector.

ABM said this milestone reflected its commitment to creating an inclusive banking environment that blends digital innovation with traditional values.

Executive director Dr Amina Kayani said the addition of the three digital banks signifies a unified approach between the 10 conventional banking groups and three digital banks.

She noted the collaboration strengthens the industry’s adaptability, resilience and focuses on meeting diverse societal needs.

Rapid growth of digital financial services

According to Bain & Company, the digital financial services sector continues its upward trajectory, with digital banks in Malaysia offering compelling features and ease of access, driving growth.

 This means the prognosis for digital banks looks bright as digital payment transactions are set to touch US$172 billion (RM765.4 billion) this year, up five per cent from last year.
-- BERNAMA