Just four years after Malaysia awarded its first digital banking licences, the market is entering a more sobering phase.

A string of high-profile senior leadership exits has prompted renewed questions about stability, execution, and whether Malaysia’s digital banking experiment is entering a more difficult phase.

And the more recent industry chatter pointing to the possible exit of AEON Bank’s Chief Executive Officer, Raja Teh Maimunah, who is widely rumoured to be among the candidates for the next Bank Islam Group CEO, is raising a few eyebrows and questions on whether or not digital banks in Malaysia are likely to survive in this current form.

For Fadrizul Hasani, former Chief Technology Officer of GXBank and an early engineer at Grab, his view is blunt.

“Honestly, no,” he said. “Not all five will survive in their current form over the next five years.”

The reasoning is structural rather than speculative.

Malaysia remains a relatively small banking market, especially when compared with regional peers that can support multiple scaled digital players.

Traditional incumbents have also moved faster than many expected, rapidly closing experience gaps while retaining the advantages of balance sheet scale, distribution, and customer trust.

At the same time, banking continues to have high switching costs. Customers may open secondary accounts, but primary relationships remain sticky.

In that environment, scale and differentiation become decisive very quickly.

Fadrizul believes some form of consolidation, repositioning, or quiet wind-down is almost inevitable.

Survival will not be determined by brand polish or launch momentum, but by the ability to build products that are genuinely differentiated, operate efficiently at scale, and evolve without continuously burning capital.

“Those who treat tech as core will last longer than those who treat it as a support function,” he said.

Innovation Has Largely Stopped at the Surface (With One Notable Exception)

Looking past launch narratives, Fadrizul is measured but clear about the industry’s innovation record so far.

Faster onboarding, cleaner interfaces, and fewer branches have improved customer experience, but they have not fundamentally changed how banking products are structured.

“If we’re honest, most of what we’ve seen so far is still table stakes,” he said.

The original promise of digital banking was structural change.

That meant new pricing models, alternative credit assessment approaches, and products that adapt to how Malaysians actually earn and spend.

What has emerged instead, he argues, is largely better packaging around conventional banking constructs.

There are, however, early signs of what genuine change could look like.

Fadrizul points to Ryt Bank as one of the more notable exceptions in the local landscape.

“One early exception worth noting is Ryt Bank, which has AI-native interactions and more personalised, conversational banking built into the core experience,” he said.

Its use of AI-native interactions and conversational banking embedded into the core experience represents a step closer to rethinking how customers engage with financial services.

“That’s closer to real innovation, and the industry as a whole hasn’t fully crossed that line yet,” he continued.

Financial Inclusion Was Always the Harder Problem

Digital banks in general, not just in Malaysia, were pitched as a tool for financial inclusion, yet much of the early traction has come from salaried, digitally fluent users.

Fadrizul does not see this as abandonment, but as a reflection of how difficult inclusion really is.

“Serving the underserved is genuinely hard,” he said.

“Margins are thin, data is messy, behaviour is non-linear, and traditional banking products don’t fit well.”

But the problem, in his view, is not whether technology can enable inclusion.

It is whether teams are willing to rethink products from first principles, rather than applying a traditional banking lens to non-traditional financial lives.

“If you design products around daily cash flow, irregular income, and real-world constraints, inclusion becomes possible,” Fadrizul gave his opinion.

Why Digital Banks in Malaysia Still Feel Imported

Fadrizul has long spoken about wanting to build products that are genuinely Malaysian.

Today, he believes many local digital banks still feel closer to imported templates than locally rooted institutions.

He said that features are often copied from other markets without sufficient adaptation to local income patterns, cultural norms, or emotional relationships with money.

Malaysia, he argues, is not simply a smaller version of another market. Money moves differently, and people relate to it differently.

His perspective was shaped during his time at Grab, where meaningful improvements often came from close, sustained engagement with users.

Engineers and product teams spent time with drivers, listened to their frustrations, and observed how the app was actually used in daily work.

One example stayed with him.

A seemingly minor change, increasing font sizes in the driver app, led to a dramatic improvement in booking acceptance rates.

The impact was not driven by innovation theatre, but by empathy and practical understanding.

That lesson, he believes, applies directly to banking. A genuinely Malaysian digital bank will not be built from feature lists or borrowed playbooks.

It emerges from deliberate design rooted in local realities, including gig work, family obligations, religious considerations, and informal financial behaviour.

When Technology Is Treated as the Business

Having operated in both big tech and banking environments, Fadrizul draws a sharp contrast in how technology is perceived.

At Grab, he said, technology was the business. System failures had immediate consequences for drivers’ livelihoods.

That reality created strong ownership, high accountability, and a culture where reliability and iteration were non-negotiable. Trade-offs were made by people who had lived through production failures and recoveries themselves.

In digital banking, technology is more often treated as an enabler.

Decisions tend to follow familiar paths, experimentation is approached cautiously, and long-term technical investment is frequently constrained in the name of risk management.

Accountability becomes diffused across layers, and learning slows.

Over time, this makes it harder to build systems that are both resilient and capable of evolving.

What Real Technology Leadership Looks Like

When Fadrizul says digital banks in Malaysia need to be led like real technology companies, he is referring to a specific leadership mindset.

Ownership of production outcomes is non-negotiable. Leaders stay close to the systems they are accountable for, feel personal responsibility when customers are impacted, and understand that building and running cannot be separated.

Strategy without hands-on accountability is insufficient.

Fadrizul noted that a real tech company leader doesn’t necessarily just approve roadmaps or talk strategy. In fact, these so-called leaders must stay close to the systems and feel personally accountable when things fail.

“Without hands-on ownership and purpose at the top, no amount of talent, tooling, or process will compensate,” he said.

Conviction matters as much as competence. Leaders must genuinely want to make a difference for users, not simply deliver milestones.

It Was Never a Talent Problem

One of the most common explanations for slow progress in digital banking is a lack of talent. Fadrizul firmly disagrees.

Malaysia has capable engineers and product leaders.

He believes that strong technology talent has global options and is motivated by impact, ownership, and meaningful problems. When environments do not support those motivations, people leave.

The “real shortage” to him lies in leadership and governance. There is a lack of technology leaders with real experience building and running systems at scale being placed into banks.

“Leaders who have the muscle memory of building and running technology organisations at scale,” he highlighted.

At the board level, success is still too often measured through launches and surface metrics.

Questions about operating maturity, decision velocity, accumulated technical debt, and system health receive less attention, despite their long-term importance.

“Boards do not need to become engineers,” Fadrizul said.

They do however, need to be deliberate about who they appoint, what they demand, and how they define success.

By 2027 the Label Will Matter Less

Looking ahead, Fadrizul believes the term “digital bank” itself will fade in relevance.

By the latter part of the decade, the winners will simply look like well-run financial technology companies that happen to be regulated.

They will ship continuously, personalise deeply, and operate with high resilience. Others will consolidate, retreat into niches, or quietly disappear.

“The licence was never the moat,” he said. “Execution is.”

Featured image: Edited by Fintech News Malaysia based on images by Who is Danny and EyeEm via Freepik.