Malaysian regulators rang in the new year by joining their Association of Southeast Asian Nations neighbours in a full speed ahead shift towards digital banking, granting operating licences to two new digital banks.

The Ministry of Finance ( MoF ) and Bank Negara Malaysia, the country’s central bank, granted operating licences to Ryt Bank and KAF Digital Bank, in a bid to widen financial inclusion to underserved sectors in the country, while also introducing technology-driven solutions into the banking sector.

The licences are the last two to be formalized after the central bank announced in April 2022 that the MoF had approved digital banking licences for five consortiums.

Ryt Bank, an artificial intelligence ( AI )-powered digital bank backed by YTL Digital Capital and Sea Limited, and KAF Digital Bank, a Shariah-compliant Islamic digital bank led by KAF Investment Bank, were both officially given regulatory approval to commence operations on December 20 2024, though both announced the developments in separate press releases just last week. 

Ryt Bank CEO Melvin Ooi says the new lender is “built by Malaysians, for Malaysians. [And] that by harnessing the power of artificial intelligence ( AI ) to provide an unequalled customer experience, we will deliver financial services that are meaningful and inclusive while helping customers achieve their financial goals.” The partnership between YTL Digital Capital and Sea Limited, he adds, “brings together two trusted brands that have a global track record”. 

The new venture sees YTL Digital Capital, the digital banking arm of YTL group, a conglomerate with interests in infrastructure, telecommunication and power generation, join with Sea Limited, a global e-commerce internet company, whose core businesses include Garena, Shopee and SeaMoney. 

In the statement announcing the regulatory approval, Ryt Bank says it will roll out unique features in an effort to capture the 15% of Malaysians who remain underserved and underbanked. These features include an advanced fund transfer feature that “can initiate and complete fund transfers effortlessly using a single text input”, which the lender says will support multiple languages, to help users save time while ensuring accessibility “for a diverse range of users”.

The bank will also roll out an Al-powered private banker “designed to simplify banking services, deliver tailored financial insights and manage advanced savings strategies”.

Meanwhile, KAF Digital Bank, led by a consortium including Carsome, MoneyMatch, Jirnexu, StoreHub and KAF Investment Bank, says it will focus on delivering a secure, efficient and Shariah-compliant banking platform.  

In a statement released by KAF Investment Bank, the group, made out of companies all headquartered in Malaysia, says that KAF Digital Bank seeks to deliver “a robust and resilient banking infrastructure that underpins the trust and expectations from Malaysians”.

“Together with the consortium partners, KAF Digital Bank,” it says, “aims to serve the people while continuously striving to deliver Shariah-compliant innovative banking products and services.”

The digital bank will be rolled out in phases,” it notes, “and will begin operations under an alpha testing phase with a “small select user group”, before a wider roll out into a beta testing phase with expanded users, to ensure its reliability and effectiveness. After these two phases are completed, the bank says the public can then sign up for accounts.

“We aim to continuously improve our product value propositions,” the bank adds, “and provide our customers with a secure, safe and efficient banking platform, catering to the evolving needs of today’s tech and financially savvy customers.”

With the approvals, Ryt Bank and KAF Digital Bank join the three other digital banks, which launched last year in Malaysia. These include GXBank, a joint venture ( JV ) between Grab Holdings and Singapore Telecommunications; AEON Bank, the first shariah-compliant digital bank operated by a consortium led by AEON group: and Boost Bank, a JV between Boost Holdings and RHB Bank.