TLDR: A recent Bank Negara Malaysia (BNM) survey reveals that over 60% of Malaysian financial firms consider AI a strategic priority for the next one to three years. The 2024 survey found 71% of banking institutions and DFIs, and 77% of insurance and takaful operators, have already implemented at least one AI application. BNM is actively guiding this adoption, emphasizing augmentation over replacement of human decision-making, and is exploring future regulatory frameworks to address emerging AI-related risks.
KUALA LUMPUR – Artificial intelligence (AI) is rapidly becoming a cornerstone of Malaysia’s financial sector, with a recent survey by Bank Negara Malaysia (BNM) indicating a significant commitment to the technology. According to BNM’s AI Survey 2024, which garnered 120 responses, over 60% of banking institutions and insurers now view AI as a strategic priority for the next one to three years. This trend is expected to continue, as more than half of the respondents believe AI can generate substantial new value for both their organizations and consumers.
The survey highlights a notable increase in AI implementation across the sector. In 2024, 71% of banking institutions and development financial institutions (DFIs) had implemented at least one AI application, marking an increase of over 56% from the previous year. Similarly, 77% of insurance and takaful operators adopted at least one AI application, up from 58% in 2023. This momentum is partly fueled by a growing interest in Generative AI (GenAI) applications.
AI is being integrated across the entire financial value chain, from front to middle to back office. Most current applications are designed to augment, rather than replace, human decision-making. Customer analytics and marketing currently lead in overall AI projects, though many are still in limited deployment. Conversely, internal operations show the highest rate of full deployment, leveraging AI to streamline processes and enhance automation. In the realm of technology and cyber risk, AI adoption stands at up to 10%, driven by solutions for detecting internal malware and responding to security threats. However, higher-stakes areas like capital and liquidity management, along with claims review and processing, have yet to see full AI deployment.
Structurally, 2024 witnessed a significant shift, with more than a third of financial service providers now anchoring AI adoption in institution-wide strategies. Additionally, over a quarter have established dedicated AI Centres of Excellence to drive execution. BNM emphasizes its vigilance in monitoring AI usage and its potential risks. The central bank acknowledges that existing regulatory frameworks may not fully address new risks introduced by AI. Consequently, BNM stated that “an escalation in supervisory focus may be considered if AI-related risks become more material, in line with the principles of parity, proportionality, and neutrality.” This could lead to new regulatory expectations, particularly if AI applications become widespread in critical functions or begin to replace human decision-making.
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BNM is actively engaging with financial service providers to deepen its understanding of both the opportunities and challenges associated with AI adoption. The central bank is seeking industry feedback on its discussion paper, including key actions organizations are taking to mitigate AI deployment risks. Feedback submissions are open until October 17, 2025, underscoring BNM’s commitment to fostering responsible innovation in Malaysia’s dynamic financial sector.
