Based on this week’s announcement by Bank Negara, digital bank licenses will be issued only by the first quarter of 2022. The concern is would the Malaysian digital bank landscape have lost ground by then? Globally, digital banks are already in advance stages of operations.
To be sure, setting the rules right on the onset for digital banking is of utmost importance. It involves the main artery of the economy, namely the banking system. Perhaps this is why Malaysia’s central bank is not rushing the matter.
On Thursday, Bank Negara issued a policy document on licensing framework for digital banks following a six-month public consultation.
Bank Negara said the licensing framework for digital banks aims to enable the innovative application of technology to uplift the financial well-being of individuals and businesses and foster sustainable growth.
This includes expanding meaningful access to and promoting responsible usage of suitable financial solutions to the unserved and underserved segments.
The framework adopts a balanced approach to enable admission of digital banks with strong value propositions while safeguarding the integrity and stability of the financial system, as well as depositors’ interests.
To achieve these outcomes, a simplified regulatory framework will be applied to digital banks during the initial stage of operations, commensurate with an asset threshold of not more than RM3bil for three to five years.
Submission of applications to conduct digital banking business or Islamic digital banking business shall be made to the Bank no later than June 30,2021.
Up to five licenses may be issued to qualified applicants. Notification on the grant of license will be made by the first quarter of 2022, Bank Negara said.
It does seem that the central bank is on the right track with ensuring only the most qualified applicants get to run digital banks.
That said, one wonders how the digital banking space will grow globally and whether Malaysian licenses could have lost any ground by 2022.
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