When Bank Negara Malaysia (BNM) removed the cap on digital insurer and takaful operator (DITO) licences in July 2024, the reading in the market was almost unanimous: the floodgates were about to open.

The regulator had signalled five licences back in November 2022. Now it was saying it would license whoever met the requirements, however many that turned out to be.

Bank Negara has not published how many applications it has received, and it does not comment on individual applicants, so nobody outside Sasana Kijang can give you a number.

But if you spend your time in this sector, as I have throughout my career, the absence is loud. The consortium chatter that preceded the digital banking licences is not there.

I want to argue that this is not a failure of the framework. It is the framework working, and it is worth understanding why before anyone concludes that a thin field means an easy licence.

The cap was never the hard part. When there were five licences, the competitive question was whether you were in the top five.

Take the cap away and that question disappears but the requirement underneath it doesn’t move an inch.

You are no longer racing anyone. You are simply being asked whether you can do this.

That is a much less flattering question, and the pre-application consultation is where a lot of people have discovered it.

Consultation with BNM is mandatory before you file. It is designed to make sure applications arrive prepared.

As one senior executive at a licensed insurer put it to me, parties went in with a deck and came out understanding that they were being asked for a business: an actuarial function, a Shariah committee, a capital plan, a conduct framework, and a distribution model that genuinely reaches the people the framework exists for.

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