When digital banks first appeared around 2020, they’ve since become embedded in everyday financial behaviour, especially in Singapore, Malaysia and the Philippines
No longer limited to payments, these banks are expanding into lending, wealth management and insurance, areas once dominated by traditional players. Supported by progressive regulatory frameworks, they are embedding themselves into daily life through e-commerce, ride-hailing and other digital ecosystems.
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As they move deeper into daily life, digital banks are positioning themselves as long-term fixtures in Southeast Asia’s financial landscape. Their role is shifting from being just another option on the market to increasingly becoming mainstream for younger, mobile-first consumers and for small businesses seeking flexible financial tools. This growing relevance is not only about convenience but it reflects how digital banks are aligning themselves with the region’s broader push for financial inclusion, digital transformation and cross-border economic growth.
From experiment to mainstream adoption
The pandemic years accelerated digital adoption across the board, from e-wallets to online shopping. In this environment, digital banks found fertile ground. The number of customers using digital banks in Southeast Asia has grown steadily since 2020, with digital banks now embedded in everyday financial behaviour.
Malaysia illustrates this shift clearly. Even before COVID-19, online banking and e-wallet usage were rising, but the pandemic created a sharp inflexion point. Online banking transactions increased from about 1.7 billion in 2019 to 2.5 billion in 2020, while e-wallet transactions jumped 131% in the same period. This surge set the stage for the country’s five new digital bank licensees, granted in 2022, several of which are now fully operational.
A similar story is unfolding across the region. In Singapore, MAS-licensed players like Grab-Singtel’s GXS Bank are scaling quickly, while in the Philippines, digital banks such as Maya Bank are reaching millions of first-time account holders. Together, these examples show how digital banks have moved from being seen as “alternatives” to becoming part of the financial mainstream.
Beyond payments: diversifying services
The early perception of digital banks was that they were mainly useful for simple payments or transfers. That image no longer holds. By 2025, these players are branching into lending, wealth management and even insurance. All areas were once monopolised by legacy banks.
For instance, SeaBank in Indonesia and the Philippines has built strong consumer loan portfolios, while GXS in Singapore now offers micro-investment and savings products. In Malaysia, digital banks are expected to make headway in SME lending, providing faster credit approval processes than traditional institutions. This evolution shows how digital banks are aiming not just to complement, but to compete head-on with incumbents.
The ability to offer such services is partly due to technology, but also the data advantage digital banks hold. With access to real-time spending patterns and transaction histories, they can build customer profiles more quickly and assess creditworthiness beyond traditional credit scoring models. In Malaysia and Singapore, digital banks are tightly integrated into ride-hailing and e-commerce platforms. A user booking a Grab ride might be offered micro-insurance at checkout, while a small business selling on Shopee can access working capital loans directly through their seller dashboard. In the Philippines, Maya Bank links directly to social media and payments apps, making financial services almost invisible in the flow of daily life.
This embedded model enhances customer loyalty and reduces the likelihood of switching back to a conventional bank. It also illustrates how digital banks are weaving themselves into the very infrastructure of digital economies.
The role of regulation in shaping the future
A key enabler of this transformation has been regulation. Rather than holding digital banks at arm’s length, regulators in Southeast Asia have actively nurtured the sector while imposing guardrails to protect consumers.
Malaysia’s Bank Negara has taken a phased approach, with a “foundational phase” requiring new licensees to limit asset sizes and gradually scale operations. This cautious rollout ensures stability while allowing players to innovate. Similarly, the Monetary Authority of Singapore (MAS) has encouraged digital banks through a strict but clear licensing regime. In the Philippines, BSP lifted its moratorium on new licences in Aug 2024 and now targets up to 10 digital banks.
These frameworks give confidence not only to consumers but also to investors. By setting clear expectations, regulators are signalling that digital banks are here to stay, not short-lived experiments.
Together, these approaches highlight a common thread across Southeast Asia: regulators aren’t just reacting to digital banks, they are actively shaping the conditions for their success. By balancing innovation with safeguards, they’ve helped digital banks move beyond their “startup” phase into credible, long-term institutions that can compete head-on with traditional banks.