KUALA LUMPUR: Bank Negara Malaysia's decision on the issue of digital banking licences to five entities indicates that the competitive landscape in the financial industry in Malaysia will continue to grow.

With space for more players to provide better options for clients, Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said financial inclusion is also likely to be extended as the target markets will be more comprehensive, which may include the underserved or the underbanked customers.

"I suppose this would be the key catalyst for the micro, small and medium enterprise (MSME) growth and improved financial literacy among the general public across all income cohorts," he told the New Straits Times.

Putra Business School associate professor Dr Ahmed Razman Abdul Latif said the central bank has ensured that all successful bidders meet all prudential criteria.

He said all of them are expected to contribute toward greater financial inclusion by offering products and services to address market gaps in the underserved and unserved segments.

"This includes promoting suitable and affordable financial solutions by leveraging the innovative application of technology," he said.

Besides that, Razman said that the majority of these successful bidders are Malaysian-owned companies would ensure that they will be able to address the local needs better.

"However, Bank Negara should not stop at five licenses, and more opportunities should be given later in the near future, especially for local companies to be given additional digital licenses, especially those who want to provide Islamic products," he said.

Last Friday, Axiata Group Bhd's unit Boost Holdings Sdn Bhd, in a consortium with RHB Bank Bhd, secured the digital bank licence from Bank Negara.

The consortium was one of the five successful applicants for the digital bank license.

Besides Boost and RHB, the consortium of GXS Bank Pte Ltd and Kuok Brothers Sdn Bhd, and the consortium led by Sea Ltd and YTL Digital Capital Sdn Bhd have also secured the license under the Financial Services Act 2013 (FSA).

Meanwhile, the consortium of Aeon Financial Service Co Ltd, AEON Credit Service (M) Bhd and MoneyLion Inc, and the consortium led by KAF Investment Bank Sdn Bhd has secured the license under the Islamic Financial Services Act 2013 (IFSA).

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