Malaysia’s first digital bank starts operations

• Malaysia awarded five digital banking licenses in April 2022 to successful applicants.
• GXBank is the first digital bank to receive regulatory approval to begin operations. 
• Beta-testing to start soon with employees from GXBank, Grab, and Kuok, with further roll-outs to the wider public in stages.

Digital banks in Southeast Asia are a game-changer in the financial services industry. Over the past three years, several digital banks have emerged in the region, offering customers a simpler and more innovative way to bank.

While incumbent banks still remain important to customers, the flexibility and simplicity of digital banks have proven to be crowd-pullers. For example, in Singapore, digital banks continue to see new customers sign up for their products and services, despite some having concerns about the stability and security of digital banks.

In fact, Singapore’s Trust Bank, which was launched a year ago, is currently the world’s fastest-growing digital bank by market share. Trust Bank has more than 600,000 customers, which makes up roughly 12% of the addressable market in Singapore.

The bank recently celebrated its first year in operation and recorded significant milestones, including users spending more than SG$1.6 billion on their Trust cards. Other customer usage and savings trends included users saving more than SG$16 million through FairPrice Vouchers. The bank also recorded over 2.1 million transactions overseas, with total savings of more than SG$6 million compared to cards that charge FX fees.

Over in Indonesia, Jakarta-based Allo Bank claims to serve over six million customers, providing digital banking services that include payments and “buy now, pay later.” Allo Bank, which is also Indonesia’s largest digital banking platform, recently announced a partnership with Tencent Cloud to boost its digital banking solutions.

The first digital bank in Malaysia

In Malaysia, the central bank, Bank Negara (BNM), awarded five digital banking licenses to successful applicants in April 2022. Of the five successful applicants, three are majority-owned by Malaysians. The successful applicants will undergo a period of operational readiness that will be validated by BNM through an audit before they can begin operations. The process was expected to take between 12 to 24 months, with a deadline set in April 2024.

One of the successful applicants is a consortium led by GXS Bank Pte Ltd. and Kuok Brothers Sdn Bhd. GXS Bank is a digital bank joint venture between Grab and Singapore Telecommunications (Singtel). The Grab-led digital bank, called GX Bank Berhad (GXBank) has been able to successfully complete its operational readiness ahead of schedule.

As such, GXBank is officially Malaysia’s first digital bank to receive approval to begin operations from the Minister of Finance and BNM. GXBank successfully completed an operational readiness review and has been approved to begin operations effective 1 September 2023.

The digital bank, which has more than 95% Malaysian employees from both the technology and finance sectors, will be led by Pei Si Lai, who said “At GXBank, we are driven by our shared purpose and passion to bring positive transformation to the financial industry, starting with solutions to address the financial struggles of Malaysians and businesses.

“Standing on Grab’s legacy of innovative tech and economic inclusion, we hope to redefine banking and reshape Malaysia’s financial landscape. Our collaboration with consortium partners such as Kuok Group and other industry players will enable us to work hand in hand, leveraging our respective ecosystems to nurture a resilient and financially inclusive Malaysia, where no one is left behind,” Pei Si added. 

Echoing Pei Si’s enthusiasm, Datuk Zaiton Mohd Hassan, a board member of the bank, said the board was excited to be part of GXBank’s journey to drive real change and reinvent Malaysia’s financial sector.

“We are at the forefront of the region’s fast-evolving fintech landscape. With the collective strength of all our partners and digital banks in Singapore and Indonesia, GXBank is poised to offer equitable access to an innovative and transformational banking experience. We hope this will enable more Malaysians to be financially independent, creating a better future for themselves, their families and the country,” said Datuk Zaiton.

The digital bank is expected to start offering services by beta-testing its app with its employees, as well as employees from Grab and Kuok Group. The bank plans to progressively roll out services to a wider pool of users in the future so that it can continuously receive feedback and refine the user experience before launching to the broader public.

Leveraging technology and innovation, GXBank hopes to serve the needs of the unserved and underserved individuals, as well as micro and small-to-medium enterprises (MSMEs). Additionally, the digital-only bank will support customers’ needs through various channels including a bank app and 24/7 customer support via multiple platforms.

The remaining four successful digital banks in Malaysia are also vigorously testing their services and could make their debut as soon as they get their approvals from BNM.

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