KUALA LUMPUR: Digital banking new entrants that are able to offer meaningful products primarily in terms of assets and that demonstrate a high level of trust will pose a threat to incumbent banks.

       Al Rajhi Bank Malaysia chief executive officer Arsalaan Ahmed said real competition is coming and the banking sector is set to become an exciting space over the next 12 to 18 months.

       "However, if they aren't able to do that, they wouldn't be a threat to existing players. On the flip side, incumbent banks need to get comfortable with the internal competition of digital channels.

       "So, they should welcome that because it will allow them to protect their business. The real threat to incumbent banks is by not allowing internal competition," he said during a virtual media briefing on Al Rajhi Bank Malaysia’s digitalisation plans.

       Arsalaan said Bank Negara Malaysia's digital banking licence efforts will create a new playing field in the country.

       The Internet banking penetration and transactions recorded a strong double-digit growth over the last five years, he added.

       As for Al Rajhi Bank, he said it is embarking on the digitalisation journey as it has set its sights to become an Islamic finance innovation bank in 2022, targeting retail and small and medium enterprises. It also plans to build a market outside the Klang Valley, particularly in Sabah and Sarawak.

       Arsalaan said strategic partnership with industry leaders will enable the bank to leapfrog conventional banks and financial technology companies. Besides building strategic investment in technology, it will also hire top talent to drive its digital agenda.

       Overall, the banking industry should see a renewed level of activity next year as economic activities pick up, despite the possible disruption from the Omicron variant.

       "The banking sector will be able to support more economic growth next year. So, I foresee a positive outlook for 2022 compared to the last couple of years," he noted. - Bernama