With Bank Negara announcing the license for the 5 successful applicants who will be operating Digital Bank in Malaysia, it’s good to understand how these banks will function and the benefits of a non-physical bank.
As the name suggests, Digital Bank will be operating entirely in the digital space which means there is no branch nor actual bank building, every transaction will be done virtually over digital devices.
According to Bank Negara lists, the awarded firms are Boost and RHB, YTL and SEA, and GSX Bank and Kuok Brothers for non-Islamic banking as for Islamic the Central Bank named AEON Financial and MoneyLion and a consortium led by KAF Investment, now whether will all parties will start offering services to customers if yet to be confirmed.
But looking at the excitement surrounding Digital Bank in the region and Singapore already launching its services, Malaysians will not have to wait very long. So how will Digital Bank be different from conventional banking?
Firstly, there is be no physical branches with the entire bank sitting on your palm, this will make transacting and banking much more convenient. With low entry costs for the player, fees and service charges could also be reduced.
Secondly, Bank Negara and the Ministry of Finance is looking at Digital Banks to focus on unmet financial needs, for example, credit scoring based on alternative data to facilitate lending to those with limited credit history.
Thirdly, the expansion of new innovative financial products. With Digital Bank, the digital-first solution providers can disrupt traditional conventions and come up with exciting products to meet current trends. They can also custom or personalise financial management tools based on demand.
These are just some of the experiences customers could enjoy when Digital Banks start rolling out their services, however looking at the list like Boost, SEA, and YTL Digital, there could be more bundles and rewards to accelerate the pick up rate.
Banking is about to change in Malaysia!
