One of the most compelling promises of digital banks, especially in emerging markets like Malaysia, has been their ability to foster financial inclusion. When Bank Negara Malaysia (BNM) unveiled its list of licensed digital banks, much of the accompanying rhetoric revolved around reaching the unbanked and underbanked segments—the gig workers, microentrepreneurs, rural dwellers, and low-income individuals often ignored by traditional financial institutions. And now, the time is ripe to evaluate whether this promise is materialising or if the initiatives have merely remained on paper, dressed up as public relations exercises.
Malaysia’s unbanked population, though steadily declining, still stands at roughly eight per cent of the adult population. The underbanked—those who have access to basic financial services but remain excluded from credit and advanced offerings—form a much larger chunk. With mobile and internet penetration soaring, digital banks were expected to leapfrog barriers such as geography and documentation.
Initial data suggests that while account openings through digital banks have shown promise, the demographics tell a different story. A majority of early adopters are urban millennials, tech-savvy Gen Z, and young professionals with access to smartphones and basic financial literacy. The real challenge of onboarding low-income users in rural areas of the country, or gig workers with fluctuating incomes, remains daunting.
That said, there are glimmers of progress. Some digital banks have tailored products that cater specifically to these communities. For instance, micro-savings plans with no minimum deposit, daily-interest wallets, and real-time payment tracking features have enabled gig workers and micro-sellers to better manage their cash flow. Partnerships with e-hailing platforms and delivery services have facilitated salary advances, micro-loans, and insurance-on-demand.
However, the success of such measures hinges on usability and accessibility. While digital banks boast multilingual interfaces, including Bahasa Malaysia and simplified English, more needs to be done to address digital literacy. Tutorials, community outreach through NGOs, and user education remain patchy. Without a strong support structure, the very segments digital banks aim to uplift might find themselves left out once again, this time by design rather than default.
Geographically, most of the traction remains concentrated in urban and semi-urban centres. Data from app usage and KYC registrations indicate that states like Selangor, Kuala Lumpur, and Johor dominate the charts. The B40 income group – bottom 40% of the population based on household income in Malaysia – and users from East Malaysia still remain underrepresented. This underlines the importance of contextual outreach and customised onboarding journeys rather than a one-size-fits-all solution.
Furthermore, banks must tackle the issue of trust. Traditional banking, despite its limitations, offers face-to-face interactions and perceived safety. For the underserved, especially older users and rural dwellers, the lack of a physical touchpoint can be intimidating. In this regard, some digital banks have explored hybrid models, collaborating with local cooperatives or retail stores as service facilitators, which is a promising approach that needs to be scaled.
There are also regulatory incentives pushing the inclusion agenda. Bank Negara Malaysia’s five-year foundational phase includes periodic evaluations focused on impact metrics—including outreach to underserved groups. However, the impact remains hard to gauge publicly as most digital banks have yet to disclose detailed data.
Financial advisory firm Fintrade Securitiesopines that the journey towards financial inclusion through digital banking in Malaysia is in motion but not without its roadblocks. The intent exists, as do some innovative products, but to truly claim victory, digital banks must walk the talk—prioritising accessibility, simplifying onboarding, enhancing digital literacy, and most importantly, measuring their success transparently. Otherwise, what began as a mission to uplift may end up as a well-packaged PR narrative.
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