Malaysian digital banks to boost inclusivity – and the economy
Malaysia’s digital banks are set to enhance the nation’s financial inclusiveness, particularly for underserved and unserved segments of the population.
That’s the view of Ganesh Kumar Bangah, director of Payments Network Malaysia (PayNet), said that by leveraging advanced technology, digital banks can redefine the traditional banking landscape, offering more accessible, convenient and affordable financial services to a wider range of both businesses and individuals.
“Digital banks are also aimed at reaching Malaysians in remote or rural areas who previously faced significant barriers to conventional banking services,” said Bangah, who is also advisor to the National Tech Association of Malaysia (PIKOM).
“The ability of users to access banking operations from their smartphones or computers eliminates the geographical and logistical constraints associated with brick-and-mortar branches. This digital shift democratises financial services and opens up a realm of possibilities for those previously marginalised by the traditional banking system,” he said.
The digital bank model bypasses the need for physical branches, allowing users to access banking services online. As a result, this model significantly reduces operational costs, making services more affordable for all Malaysians, he added.
Since last year, digital banks have been introducing new services, such as real-time payments and peer-to-peer lending, focusing on the needs of entrepreneurs and small businesses, sectors often overlooked by traditional banking.
“By making banking services more accessible, affordable and tailored to the diverse needs of the population, digital banks are set to bridge the financial divide, creating a more inclusive economy for all Malaysians,” said Ganesh told the Business Today website.
PayNet’s single largest shareholder is Bank Negara Malaysia (BNM), along with 11 Malaysian financial institutions that are joint shareholders. PayNet is the national payments network and shared central infrastructure for Malaysia’s financial markets.
GXBank, the first of Malaysia’s five digital banking licensees to officially commence operations on 1 September last year, attracted over 100,000 customers within the first few weeks of launching its beta app.
“We are fully committed to bridging the gap for the underserved in line with our mission of offering every Malaysian an opportunity for financial inclusion,” said GXBank CEO Lai Pei Si. “Through our innovative products and solutions, GXBank aims to break the cycle of poverty by providing essential financial services to those historically excluded from the banking system.”
He added: “We are set to empower Malaysians with the knowledge and tools necessary for financial well-being. These efforts are designed to help customers understand and navigate the array of financial products available, enabling them to make informed decisions that can transform their lives.”
GXBank is a subsidiary of GXS Bank Pte Ltd, a joint venture between Grab Holdings Limited and Singapore Telecommunications Limited (Singtel), supported by a consortium of Malaysian investors, including the Kuok Group.
“By prioritising accessibility, affordability and educational outreach, GXBank aims to play our part in reshaping the economic landscape for a more inclusive financial future for all Malaysians,” said Lai.
SMEs urged to seize digital opportunities
Malaysia’s small and medium enterprises (SMEs) must seize the opportunities presented by digital transformation to ensure economic resilience and growth, according to Incite Innovations Group CEO Tham Lih Chung.
Highlighting the vital role played by SMEs in Malaysia’s economy – making up 98.5% of all businesses – Tham underscored the urgent need for enhanced digital adoption within this sector.
Despite SMEs forming the backbone of the nation’s economy, a significant gap in digital adoption persists, as revealed by the World Bank Malaysia.
Drawing from insights provided by Incite’s database, he said only a fraction of SMEs in Malaysia have initiated digital transformation strategies, presenting a missed opportunity for growth and innovation.
Tham emphasised the global significance of SMEs, contributing significantly to GDP and job creation, and underscores the importance of leveraging emerging technologies for recovery post-pandemic.
Navigating the path to digital transformation comes with its challenges, particularly for SMEs with constrained budgets. Tham emphasised the importance of aligning digitisation decisions with key considerations and adopting an incremental approach to sustain progress over time.
Tham also highlighted the role of established SMEs in guiding their counterparts, sharing insights, and fostering collective growth through digital adoption.
Incite Innovations Group has introduced various solutions to support SMEs on their digital journey, including an integrated retail technology solution benefiting over 500 SMEs.
