05/06/2024 09:57 AM
Opinions on topical issues from thought leaders, columnists and editors.

By Dr Muhammad Ali

The concept of financial inclusion, which strives to facilitate convenient access to financial services, serves as the foundation for the idea of digital banking.

In Malaysia, many individuals from the bottom 40 per cent of the income group still fall under financial exclusion. According to industry estimates, only 39 per cent of Malaysians can take out bank loans, while the underbanked adult population of Malaysia has reached 55 per cent. Additionally, the digital financial literacy of the lower-income group is still far behind the national average.

The Malaysian government has realised the importance of digital banking and financial literacy, and has implemented several initiatives. In 2019, it launched a five-year National Strategy for Financial Literacy (2019–2023) to secure Malaysia’s financial future through financial literacy.

Other stakeholders, including the Securities Commission Malaysia (SC), Bank Negara Malaysia (BNM) and the Ministry of Education further supported and crafted the national strategy. To promote digital banking in Malaysia, BNM has started issuing digital banking licences to qualified applicants. This significant development recognises the potential of electronic platforms to enhance technology inclusion in banking services.

The concept of digital banking will no doubt move us into a paperless future with greater freedom in financial services. However, the integration of electronic platforms into our lives, particularly digital banking, poses important questions: Are we fully ready to embrace digital banking? Do we possess an adequate level of financial literacy to navigate digital banking effectively?

What is needed to be financially savvy in digital banking?

The digital landscape encompasses a wide array of subjects crucial for navigating the modern era. This includes understanding digital banking and products, essential for managing finances in a digital world.

Cybersecurity knowledge is indispensable, given the increasing threats posed by hackers and malicious actors. Familiarity with digital devices is paramount for efficient communication and productivity. Financial technology, or fintech, plays a pivotal role in shaping the future of finance and investment. Awareness of online scams and fraud is necessary to protect oneself from digital threats.

Moreover, understanding digital currency is becoming increasingly important as cryptocurrencies gain traction in the global economy. Overall, a comprehensive grasp of these digital topics is essential for thriving in the digital age.

Acquiring digital skills is also imperative in today’s tech-driven world. This includes proficiency in mobile payment systems, facilitating convenient and secure transactions on-the-go.

Understanding financial platforms and their usage is crucial for navigating the complex landscape of online banking and investment. Developing competency in financial decision-making empowers individuals to make informed choices about their money, fostering financial stability and growth.

Financial savvy encompasses a broader understanding of economic principles and trends, enabling individuals to navigate financial challenges effectively. Mastery of credit management is essential for maintaining a healthy credit score and managing debt responsibly.

Additionally, acquiring knowledge and skills in retirement planning ensures a secure financial future. In essence, cultivating proficiency in these digital skills equips individuals with the tools necessary to thrive in the digital age and achieve their financial goals.

What is required to promote digital banking and digital financial literacy in Malaysia?

Although the Malaysian government, in collaboration with stakeholders, is progressing well to improve digital banking and financial literacy through various programmes and activities, there is still a long journey to travel for a sustainable digital banking system in the country.

We can use the following recommendations to strengthen the ongoing efforts to advance digital banking and maximise its benefits for the Malaysian population:

  • Infrastructure enhancement of digital banking in remote and underserved areas.
  • Implementation of financial inclusion curricula from schools to university levels.
  • Roadshows and digital campaigns to promote digital banking and financial literacy.
  • Micro-credential courses for digital banking.
  • Regulatory support for service providers and incentives for digital banking users.
  • Collaborative efforts between financial institutions, government agencies, community organisations and educational institutes.

Now it is necessary to recognise the banking needs of Malaysian populations, especially those who are yet to receive complete benefits of financial services. Digital banking, under the shadow of financial inclusion, is the best way to extend financial services to unbanked individuals.

With the rapid change in technology and advancement in digital platforms, financial literacy is an integral part of digital banking that helps individuals stay updated. Moreover, it plays a crucial role in achieving long-term financial security, ensuring stability and peace of mind while also promoting economic growth on a broader scale.


Dr Muhammad Ali is a Senior Lecturer for the School of Accounting and Finance at Taylor’s Business School, Faculty of Business and Law, Taylor’s University.

(The views expressed in this article are those of the author(s) and do not reflect the official policy or position of BERNAMA)