Indonesia and Malaysia's virtual banking market

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“Our research shows that digitally savvy people want a banking experience that is simple, smart and safe, whereby everything can be done via a smartphone.” – Jerry Ng, President Director of BTPN


Indonesia is APAC’s most underbanked country with 260 million population falls under the bracket of not owning a bank account (as per World Bank’s financial inclusion study 2017). There has been a significant advancement in the country’s fintech space with the growing adaption of payment applications. But it still falls behind in serving a large chunk of the population with their banking needs. Despite the potential, Indonesia’s Financial Services Authority has not formulated a licensing policy to form a virtual bank. However, the authority issued amended regulation in 2019 to allow incumbent banks to conduct business digitally. This has helped Indonesian citizens use their smartphones for banking services, like request a credit card or open an account efficiently.

Following the amended regulations, DBS bank and Bank Tabungan Pensiunan Nasional (BTPN) bank have established their ‘digital-only’ banks – Digibank and Jenius respectively.

Current scenario

In 2017, a year after launching in India, DBS bank enters the Indonesian banking sector bringing together an entire suite of innovative technology – from biometrics to artificial intelligence (AI) – to enable customers to enjoy a whole new way of banking.

With digibank, we’ve built a bank that pulls together the power of biometrics, natural language, artificial intelligence and in-built security in one offering. We believe this mobile-led offering represents the future of banking, and are excited to introduce this in Indonesia, a core market for us in Asia – Piyush Gupta, CEO

BTPN Bank launched the Jenius Mobius Hub in Jakarta, Indonesia – designed by Allen international. A digital banking channel which enables customers to open and manage their bank accounts remotely via smartphones and tablets.

“As a bank that has a vision of making a difference in the lives of millions of people throughout Indonesia, BTPN has answered these demands through Jenius,” said President Director of BTPN, Jerry Ng.

An upcoming virtual bank

Post achieving success in Thailand, TMRW by United Overseas Bank (UOB) is all set to launch its services in Indonesia. The initiative will be under UOB’s banking license by the end of 1st quarter of 2020. TMRW will replicate its success strategies in Thailand to acquire customers in Indonesia. Thus, it will become a direct competitor to Digibank by DBS.


In December 2019, Bank Negara Malaysia issues ‘Draft Framework for Virtual Banks’. The new framework places emphasis on having applicants serve an underserved market and project a path to profitability. A balanced approach to enable the admission of innovative virtual banks while safeguarding the consumers and the financial system. The Exposure Draft is issued together with the Application Procedures for New Licences under FSA and IFSA, and Application Procedures for Acquisition of Interest in Shares. This is to provide clarity on the criteria for the application process under the FSA and IFSA.

Currently, Malaysia has no regulatory frameworks to support virtual banking. The central bank plans to develop and deploy one by 2020. Subsequently, licenses are to be allocated based on operational merit. Companies eyeing for the proposed license include Grab; CIMB; Affin Bank Berhad; Hong Leong Bank; AmBank; Boost.


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