Author name: Ashraf Farid

Alas, the long-awaited announcement of the winners of the much-coveted digital banking licence issued by Bank Negara Malaysia (“BNM”), has been released. Among the 29 applications received by BNM, only 5 made the cut. You may be familiar with some of the names behind the successful applicants, which include the likes of people behind popular digital brands such as Grab, Boost, Shopee, Aeon Credit/MoneyLion, and reportedly, the popular credit card comparison site, Ringgit Plus. Read the full BNM announcement here What does this mean for us, and what can we expect? New Players in the Banking Industry. Traditional banking features such as savings and current accounts, prepaid, debit and credit cards, loan and credit facilities, etc. could all be rolled out as additional financial and credit products in the e-wallets we know today, on top of the existing buy-now-pay-later features.   Fully Digitalised Banks. A digital bank is a bank that operates entirely, or almost entirely, online. Credit and loan applications will be done fully online, which eliminates the need to be physically present at bank branches. E-KYC will be safer, and more effective as ever. Customer service could become fully 24/7, and the online chat functions could be improved tremendously. There will be no need to fight the heat and wait in long queues. Gone are the days where you would need to take a half-day leave to sort out personal banking matters at a branch nearest to you.   Cheaper Fees. With the lower overhead costs incurred by digital banks in the long-run, and to stay competitive, consumers could look forward to lower transaction fees across the board.   Greater Accessibility to Financial Products. In the BNM announcement, BNM Governor Tan Sri Nor Shamsiah said, “Digital banks are expected to further advance financial inclusion. By adopting digital technology more widely for everyday transactions, we can significantly increase opportunities for our society to participate in the economy — by overcoming geographical barriers, reducing transaction costs and promoting better financial management.” We could see innovative models and variations of the financial products packaged today specially for the underserved or unserved markets.   Personalised Features. With the evolution of digital services and advancement in big data analytics, we could see in-app tracking and monitoring of spending habits improve. Of course, only time will tell what these new digital bank players have in store to boost user engagement. Putting all excitement aside, it may take between 12 to 24 months before we can see these features in action as these successful applicants will need to undergo a period of operation readiness that will be audited and validated by BNM before they can commence operations.   What other features do you think will there be in the digital banks of the future? Your guess is as good as ours. The traditional banking that we know today will probably still stick around for a while. But one thing is for sure – digital banks will positively disrupt the banking industry. It certainly is exciting times ahead. ***** About the author: This article was written by Neoh Jia Shern, Corporate Associate at LPP Law – a law firm in Kuala Lumpur, Malaysia.   The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.