Among middle-income countries, Malaysia has achieved one of the highest levels of financial inclusion in the world.
Despite a high level of access to bank accounts, there is a big gap in usage. Most Malaysians still rely on cash, and while many people have debit cards, actual usage of them is low. There are also gaps in access to and meaningful usage of other financial services: access to credit is relatively low, and many people do not have insurance.
However, Malaysia has a well-developed digital ecosystem and a high rate of mobile penetration, meaning that the country is a promising market for digital financial services to reach the underbanked.
Here are 10 facts about digital and financial inclusion in Malaysia:
1) Financial inclusion in Malaysia is high, but unbanked people are more likely to be female, have low income and live in a rural area.
- 85% of all adults have a formal financial account
- 88% of men have a formal financial account, compared to 82% of women
- 81% of the poorest 40% and those from rural areas have a formal financial account
Source: Global Findex Database, 2017
2) Despite a high level of financial access, there is a big gap in usage: 74% of Malaysians have a debit card, but only 34% have used it to make a purchase in the last year.
Source: Global Findex Database, 2017
3) Only 36% of the population is financially literate.
Source: S&P Global Financial Literacy Survey, 2015
4) More than 75% of Malaysians struggle to raise RM1,000 (US $240) to meet an emergency, and only 25% have any form of investment funds.
Source: BNM Financial Capability and Inclusion Demand-Side Survey, 2015
Conversion Rate: US $1 = RM4.1807 (Source: UN Treasury, 1 November 2018)
5) Malaysia is a mobile-first society: 95% of people have a mobile phone, and mobile penetration is 139%.
Source: BNM Financial Stability and Payment Systems Report, 2017
6) Nearly 77% of adults have access to the Internet, predominantly through a mobile device.
Source: Malaysian Communications and Multimedia Commission Internet Users Survey, 2017
7) Malaysia is a growing digital economy: it has 39 tech hubs, 29 of which are in Kuala Lumpur - the the second highest concentration in Southeast Asia.
Source: GSMA, 2018
8) Malaysia has a thriving fintech ecosystem: there are 166 fintechs in Malaysia and growing.
Source: Fintech Malaysia Report, 2018
9) But digital finance is yet to take off in a big way: only 11% of the population has a mobile money account.
Source: Global Findex Database, 2017
10) And only 32% used a mobile phone or the Internet to access a financial institution account in the past year.
Source: Global Findex Database, 2017
These statistics show that Malaysia represents an ideal environment for the expansion of digital financial services. The population is digitally literate, with high mobile and Internet penetration, yet lacks meaningful engagement in digital financial services. Expanding the range of digital financial products and services on offer to low- and middle-income people would allow these digitally connected populations to improve their financial health.