Revolutionizing Malawi’s Financial Landscape: The Advent of Digital Banking

Key Business Points

• Digital banks are coming to Malawi with the introduction of a new licensing and regulations framework, set to modernise the country’s financial sector and expand access to banking services.
• The Financial Services (Licensing, Regulation and Supervision of Digital Bank) Directive 2025 will ensure digital banks maintain sound governance and risk management practices, as well as effective oversight of technological infrastructure, cybersecurity risk, and data privacy.
• The new regulatory framework is expected to drive innovation, enhance efficiency and transparency, and support economic recovery by widening financial inclusion, particularly in rural areas, and stimulating innovation in products, pricing, and customer experience.

Malawi’s business community is set to benefit from the introduction of digital banks, following the registrar of financial institutions’ new licensing and regulations framework. The Financial Services (Licensing, Regulation and Supervision of Digital Bank) Directive 2025 aims to ensure that digital banks maintain sound governance and risk management practices, as well as effective oversight of technological infrastructure, cybersecurity risk, and data privacy. According to Reserve Bank of Malawi (RBM) Governor MacDonald Mafuta-Mwale, the licensing requirements for digital banking will include risk management, governance requirements, and commitment to use shared autoteller machine networks and cashout services with other banks.

The directive also stipulates the use of agent banking, physical office, and a branch, with digital banks permitted to establish a physical office for administrative purposes and to facilitate face-to-face customer complaints. Zikomo kwambiri (thank you very much) to the RBM for taking this significant step towards modernising the country’s financial sector. Financial experts have described the new regulatory framework as both timely and transformative, saying it can modernise the country’s financial sector, expand access, and build resilience in a rapidly evolving digital economy.

Bankers Association of Malawi chief executive officer Lyness Nkungula noted that digital banks have the potential to reach unserved and under-served populations, particularly in rural areas, through mobile platforms and agent networks. By reducing the need for physical branches, they lower the cost of service delivery and bring banking closer to the people. The directive is expected to encourage new entrants and Fintech-driven models, which can stimulate innovation in products, pricing, and customer experience, benefiting consumers and pushing traditional banks to modernise.

With digital banks built-in requirements for cybersecurity, data protection, and digital governance, the directive promotes safer, faster, and more accountable banking services, which aligns Malawi with global best practices in digital finance regulation. Financial technology expert and country manager for Paws Pay Arthur Muyepa described the RBM’s move as a real game-changer, saying for a long time access to banking in Malawi has been limited by geography and cost, with few branches and too much paperwork. Digital banks change that by operating fully online, reaching customers wherever there is a phone signal, and supporting micro, small, and medium enterprises, facilitating trade, and improving liquidity in the economy.

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