Malaysia's Central Bank Locks March 2022 for Digital Bank Appointments

Less than a month from now, Malaysia will finally have its own digital banks.


This will take place once Bank Negara – Malaysia’s Central Bank – awards the necessary licenses to the five shortlisted service providers. This comes after the provisions and regulations that enforce proper governance and compliances have been approved at the end of last year.

Credit: Bank Negara Malaysia

Malaysia, while not the first to roll out digital banks as the credit goes to Singapore, Indonesia and the Philippines, has already received 29 applications for the digital bank license. Clearly, this is important for some as so many have clamoured for the opportunity.


Among the applicants include multiple consortiums such as Paramount Corp with Star Media Group; RCE Capital and Prosper Palm Oil Mill with an unnamed tech partner; AEON Group via a 40:60 joint venture between AEON Credit Services Malaysia and AEON Financial Service; Green Packet with Zico Holdings and M24 Tawreeq as partners; RHB Bank collaboration with Axiata Group; Sunway Group and unnamed partners; AirAsia Group (renamed Capital A) with capital and international partners; and Grab and Singtel with their list of investors.


Interestingly, not all bank brands or Fintech players are jumping into this as quickly as their counterparts are in Singapore. More notable is how Singtel is making a play for Malaysia. The last know effort from a Singaporean telco to try to open up shop in Malaysia is ViewQwest. Its last known consumer engagement is the ongoing push to provide businesses with high-speed broadband via smart pipelines. To-date, there is no known proprietary fibre rollout from ViewQwest in Malaysia.


The other Singapore telco venture into Malaysia – MyRepublic – fizzled out before it could even begin.


As for Malaysia’s digital banks, the stringent evaluations that Bank Negara put in place are necessary.

Credit: Bank Negara Malaysia

Comments from Nor Shamsiah Mohd Yunus, Bank Negara Governor, to The Edge include how digital banks must offer relevant products and services to the unserved and underserved segments. “This is so that more people and entrepreneurs can better own assets and save for the future or grow their businesses,” she shared.


Right now, Bank Negara is in the “advanced stage” for assessment and will announce the license recipients with the publication of its annual report at the end of March 2022.


“We also expect the entry of these digital banks to accelerate the digitalisation of our incumbent banks. This will be good not just for the industry, but also for all of us here as customers of the incumbent banks,” she added.


Fintech is already pushing the technology and innovation envelope with banks in Southeast Asia, more so for Malaysia as mainstay brands like Maybank and Public Bank. Currently, they have rolled out new features that streamlined the overall user experience. With the former, there is the Maybank QR Pay platform and MAE spending account and mobile app. The latter introduced early last year its own SecureSign to ensure better security, such as advanced two-factor authentication, for fund transfers.


These advancements will certainly accelerate once the approved digital banks for Malaysia start sharing their customer offerings and enhanced capabilities.

 
  • Malaysia will officially launch its digital banks once license provisions are approved at the end of March 2022

  • Of the 29 applicants that signed up, only five will be selected

  • The role of these new digital banks is to directly address unserved and under-served Malaysians

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