PUBLISHED DATE: 2025-08-24 21:27:01

Unlocking Open Banking in Malaysia

Overview

Open banking in Malaysia is igniting a digital revolution, transforming the everyday lives of consumers into seamless and effortless experiences. As the world embraces open banking at varying stages of adoption and maturity, a global surge of growth opportunities awaits the financial industry.

The potential is immense for open banking to transcend borders, empowering individuals with universal access to financial services. In Malaysia, the surge in e-commerce, smartphone usage, and digital adoption has created urgency for easy, fast, and secure financial solutions.

The key to unlocking groundbreaking innovation lies in prioritizing customer journeys and integrating personalized products and services into their financial experiences. We have witnessed remarkable success stories in open banking, driven by regulators and the dynamic market landscape. Open banking is truly the next step in revolutionizing how customers engage with financial solutions.

Key Statistics:

FSI Leaders are Bullish on Open Banking

Open Banking Regulatory Initiatives in Malaysia

2016

2018

2020

Open Banking Opportunities in Malaysia

(Source: twimbit analysis, F5 Global State of Open Finance, Statista)

Outlook on Malaysian Fintech Economy

Distribution of Fintech Companies by Percentage:

(Source: twimbit analysis, Fintech news Malaysia)

7 Use Cases of Open Banking

  1. Account Aggregation
    Banks can offer customers the ability to aggregate their financial information from multiple accounts across different institutions into a single platform or app.
    Key Features:
    • Provides open APIs for secure access and account data retrieval
    • Enables customers to view all their financial information in one place
    • Enhances the customer experience, helping banks become a central finance hub
    Example: PhonePe
    • API-based account aggregation services offer users a consolidated and convenient banking experience.
    • Users can manage finances, track transactions, transfer funds, and make payments seamlessly within the PhonePe app.
    • PhonePe recorded 5 billion monthly transactions and has 460 million users.
  2. Streamlined Payments and Transfers
    Open banking simplifies payment processes and facilitates faster, more secure transfers. Banks can offer customers the ability to initiate payments directly from their accounts using open banking APIs, eliminating the need for traditional payment methods and reducing transaction costs.
    Key Features:
    • Enable customers to authorize payments through third-party apps or platforms
    • Provide seamless and convenient payment experiences
    • Reduce friction in the payment process
    Example: Paytm
    • Leverages open banking APIs for faster, real-time transactions, improving payment and transfer speed for users.
    • Easy integration allows users to make seamless and instant payments directly from their bank accounts, eliminating the need for credit or debit cards.
    • Paytm experienced a 49% year-on-year increase in average Monthly Transacting Users (MTU), reaching 74.8 million during Q1 2023. Their merchant base expanded to 28.3 million.
  3. Lending and Credit Scoring
    Banks can leverage open banking to enhance their lending processes by utilizing customer financial data for accurate credit assessments and personalized loan products.
    Key Features:
    • Enable secure access to customer financial information
    • Allow lenders to assess creditworthiness more effectively
    • Streamline loan applications
    • Reduce processing times
    • Offer tailored loan options to customers
    Example: MYbank
    • Uses open APIs and collaborations with other financial institutions to access consumer financial information, enabling accurate creditworthiness assessments.
    • Utilizes alternative data sources, such as e-commerce transaction data and digital footprints, for informed credit judgments.
    • Shortened lending process by up to 50%, increased loan approval rate by 10%, and grew the total loan portfolio by 20% to reach USD 125.8 billion in 2022.
  4. Identity Verification
    Open banking simplifies account verification and KYC processes for banks. By accessing customer financial data through open banking APIs, banks can verify customers' identities more efficiently and securely.
    Key Features:
    • Enable secure sharing of customer data for identity verification
    • Simplify the onboarding process
    • Reduce manual document submission
    • Enhance security through reliable identity verification methods
    Example: CIMB Bank Philippines
    • Leveraged AI-powered end-to-end identity verification and authentication solution offered by Junio.
    • Provided a streamlined, user-friendly, and convenient digital onboarding solution for the Filipino market.
    • Achieved a 219% CAGR, growing its user base from 2 million in 2020 to 6.5 million in 2022.
  5. Seamless Cross-Border Payments
    Banks can leverage open banking to provide customers with seamless and cost-effective cross-border payment services, improving efficiency and reducing transaction costs.
    Key Features:
    • Enable customers to initiate cross-border payments directly from their bank accounts
    • Ensure secure and compliant cross-border transactions
    • Simplify the process for customers and provide competitive foreign exchange rates
    Example: Revolut
    • Leverages open banking to provide seamless cross-border payments, offering real-time transfers, competitive exchange rates, and cost-effective solutions.
    • Users can link their bank accounts, enjoy instant transactions, and benefit from enhanced security and convenience.
    • Over 20 million registered users and USD 128 billion in transaction value in 2022.
  6. Open Marketplace for Financial Services
    Banks can create an open marketplace where customers can access a wide range of financial services and products from both the bank and third-party providers.
    Key Features:
    • Allow third-party providers to integrate their services into the bank's platform
    • Expand offerings available to customers
    • Foster collaboration with Fintech partners
    • Create a comprehensive financial marketplace
    Example: DBS
    • DBS marketplace allows consumers to buy or rent property, book flights or hotels, switch electricity suppliers, and buy or sell cars.
    • Launched its first fully digital Fixed Income Execution marketplace, executing over 80 trades amounting to USD 11.93 billion in 2022.
    • Non-interest income grew by 11% to USD 1.84 billion in 2022.
  7. Real-Time Fraud Prevention
    Open banking APIs enable banks to enhance their fraud prevention capabilities. By analyzing customer financial data in real-time, banks can detect suspicious transactions or patterns and take proactive measures to prevent fraud.
    Key Features:
    • Facilitate real-time access to customer transaction data
    • Allow banks to analyze transactions in real-time
    • Detect suspicious patterns or anomalies and take proactive measures to prevent fraud
    Example: Commonwealth Bank
    • CommBank has a fraud detection engine, driven by AI, equipped with real-time decline and hold intervention capabilities.
    • Behavioral Security is being added to existing security features to help detect irregularities and protect customers.
    • CommBank prevented or recovered more than USD 100 million in scams targeted at customers in 2021.

Best Practices of Open Banking in Malaysia

CIMB

Maybank

RHB

What Makes Open Banking Projects Successful?

  1. Nurture Partnerships and Set Them for Success
    Nurture partners through strategic collaborations, focusing on high-impact initiatives for mass market convenience and a commitment to drive collaborative innovation. Empower partners with secure data access and tailored solutions to ensure success. Transparent communication and mutual celebration of milestones strengthen collaborations.
  2. Build Robust Developer-Friendly API Platforms
    Build a developer-friendly API platform, enabling secure data sharing and integration for developers. Easy access to APIs and developer tools encourages third-party developers to create innovative financial solutions. This attracts talent and collaboration, leading to enhanced customer experiences and revenue growth for banks.
  3. Maintain Regulatory Compliance and Data Security
    Recognize the importance of strict regulatory compliance and data security in open banking. Implement robust security measures and ensure compliance with data protection regulations to maintain customer trust and protect sensitive financial information. This helps gain customers’ trust and develop a favorable environment for cooperative competition.
  4. Create Transparent Data Empowerment
    Prioritize transparency, empowering customers with full data control. Banks must uphold transparency by providing clear visibility into data-sharing practices and seek explicit customer consent before sharing data with third-party providers. This approach emphasizes ethical data practices and customer empowerment.

About Publicis Sapient

Publicis Sapient is a digital business transformation company. We partner with global organizations to help them create and sustain competitive advantage in a world that is increasingly digital. We operate through our expert SPEED capabilities: Strategy and Consulting, Product, Experience, Engineering, and Data. Combined with our culture of curiosity and deep industry knowledge, this enables us to deliver meaningful impact to our clients’ businesses by reimagining the products and experiences their customers truly value. Our agile, data-driven approach equips our clients’ businesses for change, making digital the core of how they think and what they do. Publicis Sapient is the digital business transformation hub of Publicis Groupe, with 20,000 people and over 50 offices worldwide. For more information, visit publicissapient.com.

Aman Sud
Chief Growth Officer, ASEAN
aman.sud@publicissapient.com

About Thought Machine

Thought Machine has developed the foundations of modern banking with its cloud-native core banking and payments technology. Its cloud-native core banking platform, Vault Core, is trusted by leading banks and financial institutions worldwide, including Intesa Sanpaolo, ING Bank Śląski, Lloyds Banking Group, Standard Chartered, SEB, Lunar, Atom bank, Curve, and more. Vault Core and Vault Payments have been written from scratch as entirely cloud-native technologies, giving banks full control to run any bank, product, and payment set to flourish in a rapidly changing world. Thought Machine is a global team spread across offices in London, New York, Singapore, and Sydney and has raised more than $500m in funding. For more information, visit thoughtmachine.net

Lavania Vijayakumar
Sales Director, Malaysia
lavania@thoughtmachine.net