Back when Bank Negara Malaysia (BNM) granted licenses to five digital banks, the goal was clear: enhance financial inclusion and innovate the nation’s banking landscape.

Fast-forward to December 2024, and three banks are already serving customers, with two more underway. Close to 60% of GXBank, AEON Bank, and Boost Bank customers come from traditionally underserved segments, including low-income households and rural communities, according to BNM.

But are these digital banks truly transforming financial access in Malaysia, or is there still a long way to go in bridging the financial gap?

A Closer Look at Malaysia’s Digital Banks and Their Progress

Malaysia’s digital banking landscape is currently defined by three licensed banks, each with its unique approach to serving the diverse population. Two more banks – Ryt Bank and KAF Bank – will join soon.

GXBank Leads the Charge in Digital Finance

Malaysia’s first licensed digital bank, GXBank, launched in November 2023 and has firmly established its market presence with a robust suite of products and a growing customer base.

List of recent accomplishments

GXBank is the only digital bank in Malaysia listed in The Banker’s Top 100 Digital Banks. The bank signed an MOU with Malaysia Digital Economy Corporation to develop financial products for MSMEs, aiming to address the challenges the segment has in credit assessments and application procedures.

GXBank leads with digital bank deposits of RM2.16 billion (US$0.45 billion). It has also introduced GX FlexiCredit, which reportedly features a five-minute application process and offers a credit limit of up to RM150,000.

AEON Bank Sets the Standard for Islamic Digital Banking

Malaysia’s first fully Shariah-compliant digital bank, AEON Bank launched in May 2024 and offers digital savings accounts, payment cards, and budgeting tools built around secure and ethical financial practices.

List of recent accomplishments

AEON Bank was named Best Islamic Digital Bank (Global) and Best Islamic Digital Offering by a Malaysian bank at the Islamic Finance News (IFN) awards. It provides shariah-compliant personal financing of up to RM10,000 for individuals earning at least RM3,000 a month, including gig workers and commission-based earners.

To drive engagement and encourage cashless payments, AEON Bank introduced Neko Missions, a gamified loyalty programme. It also launched the GrowthStart iTEKAD programme with MADCash, equipping 100 female micro-entrepreneurs from B40 communities with coaching, mentorship, and digital skills training.

AEON Bank also announced RM711 million (US$160.43 million) in assets and RM339 million (US$76.49 million) in deposits as of November last year.

Boost Bank Innovates for Greater Financial Access With Effective Partnerships

Boost Bank, Malaysia’s first homegrown digital bank entered the market in June 2024, aiming to serve the underbanked and unbanked through strategic partnerships.

List of recent accomplishments

RHB recently invested RM51 million (US$ 11.51 million) to subscribe for 51 million additional shares in Boost Bank, maintaining its 40% stake in the digital bank.

Boost Bank launched a new debit card in partnership with PayNet and Mastercard, expanding its payment solutions for customers. It also became the first digital bank in Malaysia to support contactless payments through Google Wallet, commonly known as Google Pay.

To improve financing access for MSMEs, Boost Bank partnered with CGC Digital, allocating RM130 million for business loans through its Term Loan and Revolving Credit facilities. As of September 2024, Boost Bank reported RM399 million in assets and RM204 million in deposits.

New Digital Banks on the Horizon

KAF Digital Bank to Expand into Shariah-Compliant Solutions

Approved by BNM in December 2024, KAF Digital Bank is backed by a consortium led by KAF Investment Bank Berhad. Set to become Malaysia’s second Islamic digital bank, it aims to offer innovative Shariah-compliant solutions, including savings accounts, investment options, and embedded financial services.

Latest developments

As of January 2025, KAF Digital Bank is preparing to enter its Alpha Testing Phase with a select user group before expanding to a larger Beta Phase. The bank will soon open for public sign-ups and is set to make its mark in Malaysia’s digital Islamic finance market. It is also now under PIDM’s deposit insurance umbrella.

Ryt Bank Aims to Level Up Digital Banking with AI

Ryt Bank is the latest entrant in Malaysia’s digital banking race. Formed under a partnership between YTL Digital Capital and Sea Limited, the bank intends to leverage AI to create a user-friendly digital banking solution.

Latest developments

Ryt AI, one of the offerings from Ryt Bank, is an AI-powered private banker designed to streamline banking services, provide personalised financial insights, and optimise savings strategies.

One of the things that YTL AI Lab is doing is redefining the human-computer interface in banking systems, developing an app that can understand and execute verbal financial instructions seamlessly.

RYT Bank is also currently covered under PIDM’s deposit insurance scheme.

How Digital Banks Are Transforming Financial Inclusion

Malaysia’s traditional banking system has long struggled to cater to financially underserved groups. Lengthy approval processes, strict credit assessments, and physical branch limitations have left many without proper banking services.

Digital banks are changing the game by offering seamless, branchless banking. With fully digital applications, these banks remove the need for physical visits, making it easier for MSMEs, rural populations and gig workers to onboard themselves.

Next, the banks offer low-cost financial services, as reduced operational costs enable digital banks to offer lower fees and better interest rates compared to conventional banks.

Finally, by leveraging AI-driven analytics, digital banks can truly outrun its predecessors, offering financial opportunities to individuals faster than brick-and-mortar banks.

As Malaysia embraces this new wave of banking, the real test lies in whether these innovations can create lasting financial stability, or if they will simply become another option in an already complex financial toolbox.

The Road Ahead: BNM’s Vision and the Future of Digital Banking

As digital banks continue to grow, they’re set to offer more services that cater to small businesses and individuals. Imagine having access to microloans and invoice financing right at your fingertips, helping entrepreneurs and families bridge financial gaps.

These banks can also integrate financial education into their apps, empowering users to make informed decisions about their money. This approach is in line with Bank Negara Malaysia’s (BNM) vision for digital banking, which aims to bring financial services to those who need them most.

By providing these tools and resources, digital banks can help build a more inclusive financial landscape. As these banks move forward, they must strike a balance between accessibility and responsibility, ensuring that they not only expand access but also foster long-term financial stability.

The path ahead is promising, but will require ongoing innovation and a deep understanding of the community’s diverse needs.

Source of image: Edited from Freepik