In a statement, BNM said the licensing framework aims to enable the innovative application of technology to uplift the financial well-being of individuals and businesses.

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 new digital banks with strong value propositions while safeguarding the integrity and stability of the current financial system, as well as depositors’ interests.

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 RM3 billion for three to five years.

The central bank noted that digital banks will be required to comply with the requirements under the Financial Services Act 2013 or Islamic Financial Services Act 2013, including standards on prudential, shariah, business conduct and consumer protection, as well as on anti-money laundering and terrorism financing.

During the foundational phase, BNM said licenced digital banks will be subjected to a more simplified regulatory requirement relating to capital adequacy, liquidity, stress testing, shariah governance and public disclosure requirements.

Submission of applications to conduct digital banking business or Islamic digital banking business shall be made no later than June 30, 2021.

Up to five licences may be issued to qualified applicants. Notification on the grant of licence will be made by the first quarter of 2022,” it added. FMT reported earlier today that after Singapore had approved four digital bank applications this month, the pressure was now on Malaysia to issue licences of its own.