KUALA LUMPUR (Sept 30): Malaysia’s fledgling digital banks are grappling with challenges to hold onto deposits, as rivalry heats up with both peers and conventional lenders, according to an analyst.
Initially successful in drawing deposits through attractive promotional returns, outstanding deposits at digital banks have declined 5%-17% between December 2024 and June 2025, Maybank Investment Bank (Maybank IB) said in a note.
“Malaysia’s digital banks, in our view, are still at an infancy stage, with much room and opportunity for growth,” Maybank IB said. The challenge is now preserving the deposit base, it added.
Deposits at digital banks now account for less than 0.1% of the system’s total in Malaysia.
There are five digital banks licensed in Malaysia. Ryt Bank was the last to officially launch their service near the end of August. KAF Digital Bank, operated by a consortium of KAF Investment Bank Bhd and four technology companies, started in early August.
Aeon Bank, which billed itself as Malaysia’s first Islamic digital bank, launched its service in May. Boost Bank, largely controlled by Axiata Group Bhd (KL:AXIATA) and RHB Bank Bhd (KL:RHBBANK), came online in June 2024.
GX Bank was the first of the five to start its service back in November 2023.
The oldest three of these digital banks are still in the red, with cumulative losses between RM174 million and RM548 million since 2023.
Maybank IB noted that it typically takes about five- to six years for digital banks to break even, as much of their funds have yet to be deployed and were channelled mainly into liquid bonds to meet liquidity requirements.
“Products on offer are presently limited”, with financing limited to personal and small- and medium-sized enterprise (SME) loans, as well as motorbike loans, the house said.
Maybank IB thinks that other future products could include multi-currency remittance services, digital banking tools for SMEs, SME credit facilities and funding platforms, wealth advisory and investments, as well as insurance plans.