Accelerating Value Migration: The Transformative Impact of Non-Bank Players in Malaysia’s Financial Sector
As Malaysia forges ahead into the future of finance, the spotlight has turned towards an accelerating shift of value from traditional banks to non-bank players. This transformative dynamic is spurred by a combination of digital innovation, embedded finance, artificial intelligence (AI), and increasing demand for personalized services. These critical factors were at the forefront of discussions at the recent Asian Banking & Finance and Insurance Asia Summit – Malaysia 2025, held on April 15 at the Kuala Lumpur Hotel & Convention Centre, which saw participation from over 146 industry leaders and experts.
The Role of Development Financial Institutions (DFIs)
Commencing the summit, Mohd Prasad Hanif, Secretary General of the Association of Development Finance Institutions Malaysia (ADFIM), outlined the vital role of Development Financial Institutions (DFIs) in navigating today’s turbulent economic landscape. DFIs, as specialized entities established by the Malaysian government, are tasked with supporting key sectors essential for the country’s socio-economic development, which includes nurturing small and medium enterprises (SMEs) and the agriculture sector.
“Most private commercial entities shy away from lending to these critical sectors, and this is where DFIs truly shine,” Hanif remarked, emphasizing their countercyclical role during economic downturns. Unlike traditional banks, which tend to limit lending during such times, DFIs are prepared to engage with riskier segments to ensure the economy keeps moving.
A New Era of Financial Services
The summit took an insightful turn as Isaac Tan, a partner at the Boston Consulting Group (BCG), explored the financial services landscape set to evolve over the next decade. According to Tan, substantial portions of capital within the banking sector are undervalued. While banks have seen overall valuations rise, the gap between industry leaders and laggards has also widened dramatically.
Tan highlighted the ongoing value migration towards non-bank financial players, particularly those with a focused model that specializes in one or two services – whether it be payments, wealth management, or asset management. He pointed out that banks are adapting by entering markets such as private credit, adopting strategies through joint ventures and partnerships rather than solely acting as service providers.
The Digital Banking Revolution
The discussion shifted towards direct disruptors in the banking sector, notably digital banking. Led by moderator Ravi Kittane of Ernst & Young Malaysia, representatives from GXBank, Boost Bank, Aeon Bank, and Ryt Bank shared their insights on how digital banks are reshaping the banking experience for customers in Malaysia.
Each representative expressed their commitment to delivering remarkable value to Malaysian banking customers. Fozia Amanulla, CEO of Boost Bank, highlighted the innovative propositions that digital banks are ushering into the market, setting the stage for dynamic customer engagement and satisfaction.
Transformational Journey of Malaysia’s Largest Bank
In the afternoon session, Dr. Chan-Cheong Siew, Group Chief Strategy & Transformation Officer at Maybank, presented a detailed account of the bank’s own digital transformation journey over the past three years. With an emphasis on driving shareholder value amid increasing digitalization, Chan posed the critical question: “How do we progress from good to great in the next three years?”
He articulated that the key to transformation lies in inclusive execution across the entire organization, ensuring all stakeholders are engaged and no one is left behind. The results speak for themselves: Maybank exceeded its financial targets by 80% in year one and 117% in year two—evidence of a successful digital transition.
Megatrends Shaping the Future of Business
Following Maybank’s insights, Hazmi Yusof, Country Head of Frost & Sullivan Malaysia, introduced attendees to ongoing megatrends likely to influence the business landscape through 2040. He forecasted that technological advancements could compensate for declining populations in key global regions, thus transforming labor dynamics worldwide.
“By 2040, technology will play a crucial role in addressing population declines, particularly in regions like Asia and Europe,” Yusof noted. He also highlighted how geopolitical discussions might shift focus towards enhancing the integration of refugees, while the dialogue around migrant labor may experience less resistance.
Embracing Artificial Intelligence for Personalization
As the event progressed, Jeff Wee, Senior Solution Consultant from Adobe, examined how AI can be leveraged to enhance customer experiences in an economy flooded with brand messages and fleeting attention spans. The average attention span for individuals from Generation Z has been reported to plummet to just 8 seconds, which necessitates effective strategies for real-time personalization.
Generative AI, according to Wee, is proving instrumental in streamlining marketing processes, saving companies close to 40% of their time in interactions that resonate with customers deeply.
Personalized Financial Services: A New Paradigm
Adding to the theme of personalization, Balaji Srinivasan, Executive Director of Dreamfolks, emphasized the importance of reward tiers in credit card services. By incorporating incentive-based models, companies can customize offerings based on customer behavior, solidifying loyalty among users.
Unlocking Growth for SMEs through Digital Integration
The summit’s subsequent panel sought to address how digital finance and insurance can unlock the potential of small and medium enterprises (SMEs). Pallav Greg, Head of Business Banking at Standard Chartered, and KC Wong, ASEAN Market Specialist with Modefinance International, underscored the importance of embedded finance in this transformative process.
Greg illustrated a pertinent example where banks are now embedded directly within applications to facilitate instant loans at the point of sale, simplifying processes for clients and enhancing overall accessibility.
Building Trust in Financial Institutions
Transitioning into afternoon discussions, Tanvinder Singh, Director of PwC Malaysia, posed critical questions surrounding the necessity of trust in financial institutions. His insights provided a pragmatic lens through which organizations could view reputation management in the fast-evolving financial landscape.
Observability and Security in Tech-Laden Financial Services
Delving deeper into technological challenges, Sin Ta Poon of Datadog discussed scaling observability and security measures for financial institutions. As companies’ technological frameworks grow increasingly complex, Poon accentuated the need for a unified monitoring platform to effectively manage diverse data streams and enhance security.
The Future of Financial Services: A Collaborative Approach
Capping off the summit, Laurent Doucet from Roland Berger Asia led a compelling conversation on the next frontier of financial services. Joined by industry leaders like Prashant Lulla from Zurich Insurance and Chris Eng from Etiqa Insurance, discussions centered around how AI and customer-centric strategies will shape the financial narratives of tomorrow.
Conclusion: Embracing a New Financial Landscape
The Asian Banking & Finance and Insurance Asia Summit – Malaysia 2025 has set clear trajectories for how Malaysia’s finance and insurance sectors may evolve in the near future. As value migration accelerates, the integration of non-bank players, digital transformation, and personalized customer experiences emerge as unavoidable catalysts for change. As Malaysia navigates these complexities, it remains essential for all stakeholders to embrace innovation, collaboration, and resilience to thrive in a landscape characterized by rapid technological advancement.
