Traditional banks risk losing SME business as open finance takes hold
KUALA LUMPUR: Malaysian banks risk losing a significant share of their small and medium enterprise (SME) business to financial technology (fintech) firms and challenger banks as open finance reshapes the financial landscape, a banking expert said.
Malaysian banks may lose substantial SME business to fintech firms and challenger banks as open finance reshapes the financial sector, warns a banking expert. Colyn Gardner, co-founder and CEO of Manaf Gardner Associates, highlighted how the UK's long-established banks such as Barclays, NatWest, and Lloyds Bank have experienced a significant shift, with over 60% of SME lending now going to fintech companies and challenger banks within a decade.
Malaysia, with over 95% of its companies being SMEs, stands to lose a significant amount of business if banks fail to adapt. Gardner emphasized the importance of banks changing their practices to remain competitive in the era of open finance, which empowers consumers by giving them control over their financial data and services.
The shift would enable fintech firms to compete more aggressively with traditional banks, prompting banks to improve their services and capabilities to retain customers. Despite facing implementation challenges due to legacy IT systems, Malaysia is well-positioned to navigate this transition, as some payment processes already align with open banking principles.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
