Bank Negara Malaysia to Pave the Way for Neo Banks
by Vincent Fong
Bank Negara Malaysia will soon release its requirements for a virtual banking license by end of this year. Virtual banking license seems to be all the rage these days with Hong Kong announcing their 3 approved licensees the same day Malaysia announces its ambitions to regulate this space.
The introduction of such a licensing regime will likely bring about a wave of neo-banks from both incumbents and disruptors alike. The concept of neo-banks was first popularised by fintech firms like Moven, Monzo, and Starling. To put it simply neo-banks are like mobile banking on steroids — designed to be mobile first and typically without any branch
While Malaysia is only now entering this space, many of our neighbouring countries already have ventured into digital only banks.
Will Malaysians embrace the idea of a neo-bank that’s not run by the traditional folks in suit and tie? The operators will have an uphill climb ahead of them, but perhaps the rise of digital wallet players have laid the foundation for Malaysia to trust fintech firms with their money—the Fintech Association’s President, Ridzuan seems to agree with my line logic as well.
While I am as excited as the next guy about the possibility of neo-banks existing in Malaysia, I am cautiously optimistic as E-KYC guidelines are not applicable across the financial services sector and instead reserved only to the money services businesses.
After all what’s the point of a fully digital bank if I have to show up in person to sign up?