Digital Banking Licenses: Who’s in the Game in Malaysia?

Malaysia is on the brink of a financial revolution with the rise of digital banks—a new breed of financial institutions offering services exclusively online, without physical branches. With Bank Negara Malaysia (BNM) granting five digital banking licenses in 2022, the country’s financial ecosystem is undergoing a paradigm shift. These entrants promise to enhance financial inclusion, boost competition, and push traditional banks to innovate.

In this blog post, we’ll explore what digital banking means, who has secured licenses in Malaysia, their competitive strategies, and what this trend means for businesses, investors, and consumers.

📌 What Is a Digital Bank?

A digital bank offers financial services—such as savings accounts, loans, payments, and wealth management—exclusively through digital platforms like mobile apps and websites. Unlike traditional banks, digital banks operate without physical branches, enabling them to reduce operational costs and focus on user-centric, tech-enabled experiences.

Digital banks are especially impactful in regions with underbanked populations, including rural Malaysia, where traditional banking access has been limited.

🏦 Malaysia’s Digital Banking Framework

In 2020, Bank Negara Malaysia released the Licensing Framework for Digital Banks (source), outlining eligibility criteria and regulatory expectations. The framework emphasizes:

Financial inclusion for underserved and unserved segments
Responsible innovation
Strong governance and risk management
Minimum capital of RM100 million (foundational phase), ramping up to RM300 million within five years

Out of over 29 applicants, five licenses were granted in April 2022.

✅ Who’s in the Game? The 5 Licensed Digital Banks

Let’s take a closer look at the five consortiums awarded digital banking licenses by BNM:

1. Boost-RHB Consortium

Players: Boost Holdings (Axiata) & RHB Bank
Focus: MSMEs, gig economy, and underserved communities
Website: https://www.myboost.com.my
Boost, known for its e-wallet, brings fintech agility while RHB provides banking experience. Their joint digital bank, Boost Bank, plans to roll out full services by late 2024.

2. GXS Bank (Grab-KUWAIT Finance House Consortium)

Players: Grab Holdings & Singapore’s Singtel
Focus: Everyday Malaysians, ride-hailing drivers, micro-entrepreneurs
Website: https://www.gxs.com.sg
GXS aims to offer high-yield savings, flexible credit, and seamless transactions, drawing from Grab’s deep data ecosystem.

3. Sea Group (YTL Digital Capital Consortium)

Players: Sea Group (Shopee) & YTL Digital
Focus: Shopee users, e-commerce SMEs, digital natives
Website: https://www.seagroup.com
Sea’s dominance in e-commerce and YTL’s infrastructure create a compelling case for integrated fintech services.

4. AEON Credit Service (M) Bhd Consortium

Players: AEON Credit & AEON Financial Service Japan
Focus: AEON retail customers, credit users
Website: https://www.aeoncredit.com.my
The AEON digital bank is expected to tap into the chain’s loyal customer base, offering BNPL (Buy Now Pay Later), microloans, and consumer banking.

5. KAF Investment Bank Consortium (Islamic Digital Bank)

Players: KAF Investment Bank & other Islamic fintech players
Focus: Shariah-compliant banking, digital Islamic finance
Website: https://www.kaf.com.my
This is Malaysia’s first Islamic digital bank, poised to offer fully Shariah-compliant services like digital savings, Islamic microfinancing, and ethical investing.

💡 Why Digital Banks Matter to Malaysians

📱 Financial Inclusion

Digital banks are set to reach the 55% of Malaysian adults currently underserved by traditional banks (World Bank). Digital banks can serve:

Gig workers
Youth and students
Rural communities
Migrant workers

💰 Competitive Pricing & Lower Fees

With fewer overheads, digital banks can offer lower fees, higher savings rates, and tailored credit options.

🔐 Data-Driven Personalization

Backed by AI and machine learning, digital banks can deliver customized financial products, based on spending behavior, location, and even lifestyle.

🛡️ Regulation and Consumer Protection

BNM’s framework ensures digital banks operate under strict risk governance. In the initial five-year “foundational phase”:

Growth is capped to limit systemic risk
Oversight is stringent
Compliance with Anti-Money Laundering (AML) and Personal Data Protection Act (PDPA) is mandatory

More info on PDPA: https://www.pdp.gov.my

🚀 Opportunities and Challenges

✔️ Opportunities:

Boost to fintech innovation
Expanded credit access for SMEs and entrepreneurs
Enhanced financial literacy through gamified apps

❌ Challenges:

Cybersecurity threats due to full reliance on digital infrastructure
Consumer trust for banks with no physical branches
Legacy bank competition, which are now digitizing fast (e.g., Maybank’s MAE, CIMB’s OCTO app)

🧭 What Businesses and Investors Should Watch

Partnership opportunities with fintech players
E-commerce integrations, loyalty rewards, and embedded finance
ESG-aligned banking with digital Islamic banks
Enhanced cross-border payment infrastructure via APIs and blockchain

Investors should track IPOs and regional expansion strategies by these digital banks, especially in ASEAN.

🔚 Conclusion

Digital banking in Malaysia is more than a trend—it’s a structural shift in how banking services are conceived, delivered, and consumed. The digital bank license winners are well-positioned to reshape Malaysia’s financial ecosystem, provided they balance innovation with trust and compliance.

Whether you’re a business owner seeking fintech partners or a consumer exploring new ways to bank, 2025 is the year to pay attention to digital banks in Malaysia.