BNM governor Nor Shamsiah Mohd Yunus said when it came to digital banks, it isn’t a case of “the more the merrier”, Bernama reported.

She recalled that during the ’90s, there was a large number of domestic banks, many of which she said did not have the financial strength, size and scale to operate viably or compete effectively.

“Clearly, Malaysians were not better served by the higher number of banks.

“We should also not forget about the Asian financial crisis where our economy suffered its deepest-ever recession because of some of these weak banks failing – with the cost borne by taxpayers,” she was quoted as saying by the national news agency.

Last Friday, it was reported that consortiums involving RHB, YTL and Kuok Brothers Sdn Bhd were among those picked by the finance ministry to be awarded the digital bank licences.

Nor Shamsiah said BNM considered many factors, such as the size of the country’s banking system relative to the economy when deciding on the five successful applicants for the licences.

On concerns that there was a lack of Bumiputera participation in these fintech service providers, Nor Shamsiah said Boost-RHB and KAF Investment Bank, are majority-owned by Bumiputera.

She added that generally, Bumiputera shareholding in the financial sector is also significant, at 43.5%, higher than that of other economic sectors.

Nor Shamsiah said, however, that it was more important to look at this issue beyond the lens of shareholding.

It was better, she said, to focus on the impact that BNM expects and wants digital banks to have, that is, to effectively serve the “unserved and under-served segments”, many of which are from the Bumiputera community.

“At the end of the day, strong and successful digital banks will benefit all Malaysians.”