When Singapore announced its digital bank licence awardees, Malaysia also revealed its five successful applicants.
Out of the 29 applications received by Bank Negara Malaysia (BNM), three qualified under the Financial Services Act (FSA) and two under the Islamic Financial Services Act (IFSA).
The demand for virtual banking entities arose from Malaysia’s underserved market.
A 2021 study by the German cloud-native software-as-a-service (SaaS) banking platform Mambu revealed that 55% of the nation’s adult population was underbanked, with only 39% able to secure loans from banks.
GX Bank is the first digital bank to begin operations in Malaysia.
It is a subsidiary of Grab and Singtel joint-venture entity GXS Bank and a consortium of Malaysian investors, including the Kuok Group.
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At its “GX Untuk Semua” initiative launch event on Aug 2, GX Bank chairperson Zaiton Mohd Hassan noted that since operations began in November 2023, the bank has gotten over 750,000 customers, who have made over 13 million transactions through its debit cards and QR code scans.
The bank has also recorded 800,000 savings “pockets” opened. Another prominent player is Boost Bank, which was established through a partnership between Axiata’s fintech arm, Boost, and RHB Bank Malaysia.
Before joining forces with RHB, Boost was primarily a lifestyle mobile wallet, helping users with everyday transactions like paying utility bills and purchasing transport tickets.
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The app also catered to small merchant transactions under the label Boost Business.
Following BNM’s approval, Boost Bank was launched in early June this year.
Boost holds 60% equity and RHB holds the remaining 40%.
The company leverages Boost’s digital payment solutions and RHB’s extensive customer base and data resources.
A consortium of Singapore’s Sea and Malaysian conglomerate YTL will launch the final player under the FSA.
The former’s products include online shopping platform Shopee and game publisher Garena, while YTL operates in various sectors ranging from infrastructure and property to technology.
Although the launch of the still-unnamed digital bank has been delayed due to technical issues, it is reportedly on track to be introduced in the country by the end of this year.
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Law of the land
Unlike their conventional counterparts, digital banks launched under the IFSA must adhere to Islamic banking principles.
These include profit and loss-sharing between partners, risk-sharing between parties, and prohibition of engaging in ambiguous or uncertain transactions.
According to the latest statistics released by the Malaysian government in 2020, around 63.5% of the country’s 33.2 million residents are Muslims, highlighting a significant market for Shariah-compliant digital banks.
Aeon Bank was launched in May this year, with Japanese parent company Aeon Financial Service owning 60% and US-based fintech company MoneyLion owning the remainder, whose co-founders include Malaysian Foong Chee Mun.
Notably, Aeon is already a household name in the country.
The Aeon credit service has been established since 1997 and has been listed on the main market of Bursa Malaysia since 2007.
Like its digital peers, the Aeon Bank platform provides a suite of Shariah-compliant digital banking products and services.
Current offerings include a savings account with a savings “pot” feature, a debit card and the Aeon points programme.
The other licence granted under the IFSA is for the consortium led by KAF Investment Bank, which includes Malaysia’s first tech unicorn Carsome, fintech solutions provider firm Jirnexu and digital remittance platform MoneyMatch.
Established in 1975, KAF Investment Bank is a financial services group with a portfolio that includes stockbroking, investment banking, and Islamic banking.
Carsome, on the other hand, is an integrated car e-commerce platform.
The digital bank’s launch was initially planned for the end of 2023 or early this year.
However, due to technical issues, the launch has been delayed and the consortium is now aiming for an October deadline.
