Open Banking for Commercial and SME Banking in Malaysia: Unlocking New Revenue Streams and Customer Experiences

The New Era of Business Banking in Malaysia

Malaysia’s commercial and SME banking sector is undergoing a profound transformation, driven by the rise of open banking. As digital adoption accelerates and regulatory frameworks mature, banks serving business clients—especially SMEs—are presented with unprecedented opportunities to unlock new revenue streams, deliver superior customer experiences, and build resilient, future-ready business models.

SMEs are the backbone of Malaysia’s economy, representing a major growth engine and a diverse set of needs that differ significantly from retail customers. Open banking, with its focus on secure data sharing, API-driven integration, and ecosystem partnerships, is enabling banks to reimagine how they serve these business clients—moving beyond traditional product silos to deliver embedded, personalized, and frictionless financial services.

Key Drivers: Why Open Banking Matters for Commercial and SME Banking

Digital Economy Growth: With 97% internet penetration and over 75% of transactions conducted via internet and mobile banking, Malaysia’s business landscape is primed for digital-first solutions.
Regulatory Momentum: Initiatives such as the Fintech Regulatory Sandbox, Open API Implementation Group, and digital bank licensing frameworks are fostering innovation while ensuring robust data security and compliance.
Competitive Pressure: The rise of fintechs and digital-first challengers is pushing incumbent banks to innovate, streamline operations, and deliver customer-centric experiences.

Transformative Use Cases for Business Clients

1. Embedded Finance in ERP and E-Commerce Platforms

Seamless Payments and Lending: Businesses can access payments, working capital, and trade finance directly within their ERP or e-commerce platforms, eliminating the need to switch between banking portals and business systems.
Revenue Growth for Banks: By integrating banking services into the daily workflows of SMEs, banks unlock new fee-based income streams and expand their reach to previously untapped segments.
Case in Point: A recent SME-focused digital bank in Southeast Asia was built and launched in just nine months, orchestrating 22 fintech partners and delivering fully automated, API-driven services to 350,000 SMEs—demonstrating the art of the possible for Malaysian banks.

2. Streamlined Onboarding and KYC for SMEs

Digital Identity Verification: Secure, API-driven access to business and personal data streamlines KYC and AML checks, reducing manual documentation and accelerating onboarding.
Frictionless Customer Journeys: SMEs can open accounts and access services in minutes, not days, improving satisfaction and reducing abandonment rates.
Regulatory Alignment: Malaysia’s frameworks emphasize API standards and data security, ensuring that digital onboarding remains compliant and secure.

3. Data-Driven Insights and Tailored Business Products

Personalize Offerings: Deliver tailored lending, cash management, and advisory services based on real-time business performance and needs.
Enable Smarter Credit Decisions: Use alternative data (e.g., transaction history, digital footprints) to assess creditworthiness, especially for SMEs with limited traditional collateral.
Drive Value-Added Services: Provide dashboards, analytics, and actionable insights that help businesses optimize cash flow, manage risk, and grow.

Best Practices for Success: Partnership, Technology, and Compliance

Partnership Models: From Distribution to Co-Creation

White-Label and Infrastructure Provider: Banks supply regulated products while partners own the customer experience.
Co-Branded Solutions: Banks and partners jointly develop offerings that blend financial and non-financial services, addressing specific business needs.
API Aggregator/Marketplace: Banks make their services available to a broad ecosystem via standardized APIs, enabling rapid scaling across multiple partners.
Key to Success: Understand each partner’s priorities—whether it’s driving sales, improving retention, or accessing new revenue—and design propositions that align with those goals.

Technology Integration: Modular, API-Driven, and Cloud-Native

API Layer: Secure, multi-tenant APIs enable seamless distribution of services across partner platforms, supporting efficient scaling and customization.
Cloud-Native Core Banking: Modern, event-driven architectures provide the flexibility and speed required for embedded finance and real-time data flows.
Data Core: Real-time analytics and data lakes are essential for delivering personalized experiences, managing risk, and supporting compliance.
Partner Ecosystem Integration: Orchestrating relationships with a wide range of fintechs and non-financial partners is critical for innovation and reach.

Regulatory Compliance and Data Security

Strict Adherence: Malaysia’s regulatory environment emphasizes API standards, data security, and governance. Banks must maintain compliance with data protection and privacy regulations.
Robust Security Controls: Implement authentication, authorization, and continuous monitoring for all API exchanges.
Transparent Data Practices: Ensure clear customer consent and transparent data-sharing, building trust and meeting regulatory expectations.
Continuous Testing: Use regulatory sandboxes and feedback mechanisms to test and refine new propositions in a controlled environment.

Overcoming Challenges: Scaling, Complexity, and Organizational Change

Technology Complexity: Integrating with diverse partner platforms requires a flexible, modular architecture.
Organizational Agility: Banks must break down product silos and build cross-functional teams capable of rapid co-creation and iteration.
Partner Management: Efficient onboarding and support for a growing ecosystem of partners is essential to maintain quality and compliance.
Product/Market Fit: Success depends on deeply understanding both end-customer and partner needs, and rapidly iterating based on real-world feedback.

The Road Ahead: Unlocking Growth and Customer Value

Open banking is not just a technology upgrade—it’s a business model transformation for commercial and SME banking in Malaysia. By embracing embedded finance, streamlining onboarding, and harnessing data-driven insights, banks can:

Unlock new revenue streams and fee-based income
Deliver frictionless, personalized experiences for business clients
Accelerate financial inclusion and support SME growth
Build resilient, future-ready organizations equipped for ongoing change

At Publicis Sapient, we combine strategy, modern engineering, and deep industry knowledge to help Malaysian banks and fintechs define clear commercial objectives, design and implement modular technology stacks, and scale embedded finance propositions efficiently. Our experience across Southeast Asia demonstrates that with the right approach, financial institutions can move beyond traditional boundaries and create new value for business clients and the broader economy.

Ready to explore how open banking can transform your commercial and SME banking business? Connect with Publicis Sapient’s experts to start your journey.