Three of Malaysia’s five licensed digital banks have reported promising early figures, though they are not expected to disrupt the traditional banking landscape in the near to medium term, according to UOB Kay Hian (UOBKH) Research.
GXBank, Boost Bank and AEON Bank are currently operational, while Ryt Bank and KAF Digital Bank remain in the pilot stage, conducting limited rollouts to refine their digital platforms prior to broader market entry.
Deposit mobilisation has accelerated rapidly, with GXBank emerging as the frontrunner in both asset base and customer deposits. As of September 2024, GXBank reported RM2.4 billion in total assets and RM2.2 billion in deposits, reflecting robust early uptake. AEON Bank, as at November 2024, recorded RM711 million in assets and RM339 million in deposits, while Boost Bank—launched in the latter half of 2024—posted RM819 million in assets and RM573 million in deposits by March 2025.
GXBank’s strong performance was underpinned by aggressive customer acquisition campaigns and market-leading deposit rates of up to 3%. These promotional efforts have since been moderated as the bank transitions into its second year of operations. AEON Bank and Boost Bank similarly introduced high-yield savings products, although Boost Bank has pursued a more measured strategy, maintaining a lower cost of funds at 1.7% in contrast to the 3% offered by its peers.
Despite the initial traction, UOBKH Research highlighted that the combined asset base of the three active digital banks remains modest, comprising less than 1% of the Malaysian banking sector’s total RM3.7 trillion in assets as at end-April 2025. Even at Bank Negara Malaysia’s regulatory cap of RM3 billion per digital bank over the first three to five years, the collective maximum of RM15 billion would equate to just 0.4% of the industry’s current assets.
The research further noted that the digital banks are still in a loss-making phase and anticipate a breakeven timeline of more than three years on average.
Meanwhile, traditional banks continue to push forward with their own digital transformation strategies, supported by extensive product suites and wide-reaching distribution networks.
UOBKH remains constructive on select incumbents, citing valuation support, capital strength and provisioning buffers as key defensive attributes. Its top recommendations include Hong Leong Bank Bhd, Public Bank Bhd and AMMB Holdings Bhd.
AMMB was noted for its strong capital management, underpinned by robust Common Equity Tier 1 (CET1) ratios, while Hong Leong Bank and Public Bank are seen as defensive plays in a volatile macroeconomic environment, trading below historical price-to-book averages and backed by solid provisioning levels.
-The Star
