While 44% of Malaysian banks and development finance institutions (DFIs) are at an advanced stage of artificial intelligence (AI) readiness and have moved beyond the experimental stage, they still face fragmented capabilities across data, skills and operating models, a survey by the Asian Association of Chartered Banks (AICB) revealed last Thursday.
AICB said in a recent report that although AI adoption is gaining momentum in Malaysia, many institutions remain cautious about using AI-generated results for critical business decisions.
According to the report, only 17% reach established or advanced maturity.
Investments in governance, data and talent are taking shape and repeatable use cases are emerging, but uneven execution, fragmented data and capability gaps continue to limit widespread adoption, the report said.
Meanwhile, only 25% of respondents said they trust enough AI-generated output to act on key business decisions.
Note that AI activities are primarily limited to pilots and early use cases.
Efforts are often team-driven rather than organization-wide, and skills, data, and governance capabilities are still maturing.
As a result, it can be difficult to scale up successful experiments
It’s beyond the original scope.
The report also shows that only 26% of institutions have a clear strategy for connecting AI to business objectives.
79% report a lack of specialized AI technical skills.
Only 33% have established structured AI governance and model risk management.
27% apply formal AI risk stratification to adjust monitoring according to level of risk.
Overall, the findings show that AI adoption is increasing in areas such as know-your-customer onboarding, fraud detection, anti-money laundering and counter-terrorist financing, and employee productivity.
However, the report also highlights critical capability and governance gaps that agencies need to address as they move from AI pilot to responsible and scalable implementation.
These include the need for stronger AI strategies, clearer governance frameworks, improved model risk management, better explainability, stronger data governance, and broader workforce capabilities.
“Malaysian banks and DFI” [Development Financial Institutions] No longer will you ask whether AI has a role in financial services.
“The question now is whether financial institutions have the judgment, ethics, governance and professional capacity to responsibly leverage AI in decisions that impact customers, risk and institutional performance,” said Edward Lin, CEO of the AICB.
The study, jointly conducted by the AICB, the AICB Chief Risk Officer Forum and Ecosystem, is based on responses from 87 senior leaders in the banking and development finance sectors, with support from executive roundtables and interviews.
AI demand boosts Malaysia’s technology outlook despite risks – Analyst
