Grab-backed GXBank, topped Malaysia’s digital banking customer deposits with MYR 2.16 billion ($489 million) for the first nine months of 2024, RAM Ratings said Friday.
The rating agency said in a report that as the largest digital bank in Malaysia with an asset size of MYR 2.4 billion ($543 million) as at end-September 2024, GX Bank has gathered the most deposits to date.
This was largely driven by attractive promotional campaigns, which have since been scaled back as the bank enters its second year of operation.
Leveraging the established systems of GXS Bank, GX Bank became the first to launch publicly in December 2023.
The bank recorded total customers deposits of MYR 195 million ($44 million) in 2023.
Meanwhile, AEON Bank Berhad and Boost Bank Berhad, both having launched in mid-2024, were also able to capitalize on the established customer base and brand recognition of their respective shareholders with which they are affiliated.
The two digital banks’ customer deposits stood at MYR 339 million ($76.71 million) and MYR 204 million ($46.16 million), respectively in the first nine months of 2024.
Like GX Bank, both have also introduced high-interest savings accounts as a key product.
Boost Bank appears to have a more selective promotional strategy, as seen in its estimated average cost of funds of 1.7 percent in the latest available quarterly results, compared to around 3 percent for its competitors.
It is noted that as at end-February 2025, only three of the five domestic licensed digital banks had become operational.
The two other players, KAF Digital Bank and RYT Bank, received approval in December 2024 to start operations. Neither has launched yet, though RYT Bank’s recent marketing efforts suggest this may be imminent.
Expectedly, all three banks are still far from breaking even, with quarterly trends indicating that losses have yet to peak given high set-up costs, according to the report.
On the other hand, income is mainly limited to investment returns generated by the low-risk assets on their balance sheet, utilizing gathered deposits.
The key challenge for these banks lies in retaining tech-savvy and price-sensitive customers in a competitive market while managing acquisition costs and scaling up without assuming significant risks.
Shareholders have so far demonstrated strong financial support, with all three players receiving additional capital injections in 2024 that have helped preserve their equity bases.
According to the report, digital banks have also recently expanded their services to include lending, strategically focusing on specific customer segments. All three players recently kicked off lending services.
Building on five years of expertise gained through Boost Credit, Boost Bank’s financing business will initially focus on providing small and medium-sized enterprise (SME) financing solutions.
Its initial portfolio consists of over MYR 120 million ($27.16 million) in loans transferred from Boost Credit, which were previously part of the offerings available through the Boost mobile app.
GX Bank also launched its financing product late last year, setting itself apart by securing quick approval.
These offerings are available to both retail and business clients, although business loans are currently restricted to Grab merchants.
Meanwhile, AEON Bank has chosen to focus on personal financing as its inaugural product, launched in March 2025, drawing on the extensive credit expertise developed by AEON Credit in this space.
In view of the asset size cap of MYR 3 billion ($679 million) per digital bank for the first three to five years of operations, the combined assets of the three banks would remain below 1 percent of banking system assets, said the report.
At this level, RAM believes the neo banks should not pose any near-term threat to incumbent banks, which are also investing heavily in digitalization and improving user experience.
Turning to the broader fintech space, RAM highlighted that digital payments have continued to gain momentum.
Cited Malaysian Central Bank, it noted that Malaysia has surpassed its digital payment target of 400 transactions per capita originally set for 2026, currently reaching 405 transactions per capita (2019: 144 transactions per capita) – thanks to the increased adoption of QR and e-wallet payments as well as a shift in consumer behavior.
Touch ‘n Go leads as the top e-wallet service provider, boasting a user base of 16 million.
It is noted that the company has evolved into a more integrated fintech player, offering a wide range of financial services and forging partnerships with various brands on its platform.
Financially, it has yet to break even, though losses have narrowed year on year in 2023, said the report.
Given that the proliferation of digital transactions may bring about higher fraud risks and cyber threats, it said the central bank has enhanced the operational risk management standards to payment service providers to safeguard consumer interests.
In January 2025, the central bank introduced revised guidelines on electronic money, which include measures aimed at reducing cyber risks associated with third-party service providers.
“Malaysian digital banks are making a nascent mark on the industry, with all three operational banks ramping up deposit gathering efforts over the past year, driven by
high-interest savings accounts,” RAM’s Co-head of Financial Institution Ratings Sophia Lee said in a statement.
“The key hurdle for these banks lies in retaining tech-savvy and price-sensitive customers in a competitive market while managing acquisition costs and scaling up without assuming
significant risks,
“Shareholders have so far demonstrated strong financial support, with all three players receiving additional capital injections in 2024,” she added.
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