The two digital banks are Boost Bank and AEON Bank.

The two new digital banks are Boost Bank and AEON Bank. (Image by Shutterstock).

Boost Bank and AEON Bank: two new digital banks start operations in Malaysia

• Two new digital banks are to start operating in Malaysia.
• Boost Bank and AEON Bank offer different propositions with similar goals.
• Both new digital banks are hoping to bring banking services to the currently unbanked.

Another two digital banks have been given the green light to start operating by the central bank of Malaysia, Bank Negara. The two banks are Boost Bank – a joint venture between fintech company Boost and RHB Banking Group – and AEON Bank, which is a subsidiary of AEON Financial Service.

While there were a total of five applicants granted digital banking licenses by Bank Negara in 2022, only Grab’s GXBank actually began operations in the final quarter of 2023. The other two successful applicants that have yet to launch their digital banks are a consortium led by Sea Limited and YTL Digital Capital Sdn Bhd, and a consortium led by KAF Investment Bank Sdn. Bhd.

GXbank has reportedly already had over 100,000 customers since its launch. The digital bank plans to introduce a debit card for its customers sometime in January 2024, too.

Bank Negara approved licenses for five digital banks in Malaysia.

Bank Negara approved licenses for five digital banks in Malaysia.

The first Islamic digital bank in Malaysia

AEON Bank is notably the first Islamic digital bank in Malaysia. Compared to other digital banks, an Islamic digital bank will have to be Sharia-compliant. This means the bank will offer its customers financial services that are compliant with the principles of Islamic finance.

According to Raja Teh Maimunah, chief executive officer of AEON Bank, the digital Islamic bank aims to advance the promotion of financial inclusion and Islamic banking.

“As part of one of Malaysia’s most recognized retail household brands, we aim to provide accessible, inclusive, and Shariah-compliant digital banking solutions to our AEON Group of customers, as well as to all Malaysians. It is our intent to empower our communities with access to digital financial services which are simplified, safe and secure,” said Maimunah.

The AEON brand is already a highly recognized household name that has served Malaysians nationwide for over four decades. The AEON Group aims to further expand and enhance the provision of its services to its retail and wholesale customers as well as ecosystem partners such as its auto dealers, merchants, suppliers, and tenants, among others.

In addition, the AEON Bank’s advocacy of digital technology will facilitate the introduction of new and innovative products for the AEON Group, enhancing the overall value proposition for its customer base and its ecosystem partners.

AEON Bank aims to unveil its phased rollout in the first half of 2024. The rollout plan is expected to begin with an exclusive beta testing phase with AEON employees. Maimunah explained that this will allow the bank to gather insights and feedback from users to refine and optimize the app.

“By initially offering access to a select group of beta testers, we aim to collaboratively fine-tune the app to ensure it meets the expectations of our wider user base on full release,” she said.

The Boost-RHB Digital Bank Consortium received regulatory approval ahead of the scheduled timeline.

The Boost-RHB Digital Bank Consortium received regulatory approval ahead of the scheduled timeline. (Source – Boost).

Boost for digital banks in Malaysia

Compared to the other digital banks, Boost Bank is taking a more traditional-finance approach to digital banking. While none of the other digital banks are affiliated with traditional banks, Boost Bank is part of the Boost fintech company, which is a subsidiary of Axiata as well as RHB Bank.

As such, the Boost-RHB Digital Bank Consortium is the first primarily Malaysian-owned digital bank to begin operations with a pioneering embedded digital bank app in the local market. Boost holds 60% equity, and RHB owns the remaining 40%.

“Our aim is to broaden the digital banking options available to those with limited access to conventional banking facilities, and fostering an inclusive digital society for all Malaysians,” said Vivek Sood, group CEO of Axiata Group Berhad.

This is a culmination of the symbiotic and strategic partnership between a leading fintech and successful financial institution with substantial ecosystems, united by a shared vision to drive greater financial inclusion,” added Sheyantha Abeykoon, group CEO of Boost.

Just like AEON Bank and GXBank, Boost Bank will advance into the alpha testing phase, involving internal employees, family, friends, and a selected group of customers. In the lead-up to the public launch, the digital bank will progressively enhance its product propositions and refine the user experience.

Fozia Amanulla, CEO of Boost Bank, added, “Rooted in the fundamental belief that everyone deserves a bright financial future, we are determined to propel Malaysia into an age of true financial inclusivity, by harnessing the untapped potential of embedded finance with our digital bank.”

The digital banks are expected to announce capabilities that will promote financial inclusion.

The digital banks are expected to announce capabilities that will promote financial inclusion. (Image generated by AI).

Pursuing financial inclusion for all

Bank Negara awarded the digital bank licenses to these consortia based on a lengthy assessment. The assessment criteria covered the character and integrity of applicants, the nature and sufficiency of their financial resources, the soundness and feasibility of their business and technology plans, and their ability to meaningfully address financial inclusion gaps.

As such, the digital banks are expected to announce how they will promote financial inclusion as part of their venture. While GXBank has yet to make any announcements about its plans to reach the currently unbanked, both AEON Bank and Boost Bank have said they hope to provide financing and banking opportunities to individuals who have traditionally not been able to access funding.

AEON Bank aims to further that commitment by extending financial services to both individuals and small businesses who would not have access to funding and other financial services. It will also prioritize financial literacy and education initiatives to empower individuals and small businesses with the knowledge and tools to make informed financial decisions.

Meanwhile, Boost Bank believes that as it begins its operations in phases following the completion of the operational readiness audit, Malaysia is poised to unlock the benefits of greater financial inclusion.