PETALING JAYA: Digital banking will see high demand in Malaysia, given the numerous advantages that it offers to consumers and enterprises, and the rising digital literacy of the country, according to Fitch Solutions Country Risk and Industry Research.
More broadly, it said the growth of Malaysia’s financial technology (fintech) market will be underpinned by strong regulatory support and positive demographic factors, namely the large youth population, high levels of urbanisation, and a growing middle-class.
Additionally, high levels of smartphone penetration, together with the widespread availability of reliable mobile broadband networks also provide tailwinds for the uptake of mobile-centric technologies.
The Covid-19 pandemic has also accelerated the transition toward digital transformation, with digital banking expected to see the greatest rate of growth as most new digital applications and processes will, to varying degrees, be transaction-based.
“As consumers’ needs become more sophisticated and ‘digital-first’, we expect businesses will need to adopt new technologies to respond to these changing needs,” Fitch said in a report.
The agency forecasts a steady increase of 55% and 128% in both the number of mobile money accounts and mobile money transactions respectively in Malaysia over the next decade.
“Aligned with the growing trend towards digital banking, we at Fitch Solutions believe that the five groups of companies awarded the digital bank licences are well-positioned to seize this market opportunity to become a viable digital bank in the long run given their individual strengths and capabilities.”
Nevertheless, it does not expect digital banks to pose strong competition to traditional banks in the short run due to regulatory limits placed on their activities.