KAF Digital Bank Explained: A Guide To Islamic Digital Banking In Malaysia
Digital banking is no longer a “coming soon” promise. Malaysians are using digital financial services at scale, with Bank Negara Malaysia’s 2024 survey showing 92% of Malaysians now use digital financial products and services, up from 74% in 2021. That is a sharp shift in everyday money habits, from paying bills and budgeting to setting up savings pots on a phone. At the same time, Islamic finance continues to deepen its footprint, with Islamic banking’s share of total financing rising to 46.6% in 2024. Put together, the demand for Shariah-compliant products in a purely app-based experience is real, not niche.
Bank Negara Malaysia awarded five digital bank licences in April 2022 after receiving 29 applications. Two of the five are licensed under the Islamic Financial Services Act: AEON Bank and the KAF Investment Bank-led consortium which has now launched as KAF Digital Bank. The other licensees are GX Bank, Boost Bank and Ryt Bank.
KAF Digital Bank at a glance
KAF Digital Bank opened to the public on 8 August 2025 after completing a pilot phase. It operates fully via its mobile app and is positioned as Malaysia’s second Islamic digital bank. Deposits with KAF Digital Bank are protected by PIDM up to RM250,000 per depositor per member bank, the same protection limit that applies to all PIDM member banks in Malaysia.
What you can do today
- Open a Savings Account-i via the app: KAF currently uses hibah for returns rather than advertising a fixed profit rate. Based on published historical data, KAF displayed 5.00% p.a. hibah for the first RM2,000 and 3.00% p.a. for balances above RM2,000 during weekly periods between 3 June and 5 August 2025. Hibah is discretionary and not contractually guaranteed.
- Debit Card-i, DuitNow QR and app log-in with biometrics are supported, with some features subject to a short cooling-off period after account opening.
- Transaction limits: indicative limits for a standard Savings Account-i are RM5,000 daily and RM20,000 monthly, rising to RM50,000 daily and RM200,000 monthly on the Premium tier. Fees such as an early closure fee of RM20 within three months and ATM withdrawal fees up to RM5 via Visa network ATMs, are listed in KAF’s disclosures.
KAF’s consortium includes KAF Investment Bank with partners from Malaysia’s tech ecosystem, such as Carsome, MoneyMatch, Jirnexu and StoreHub, signalling a strategy to plug banking into daily commerce and SME tools over time.
How it compares to AEON Bank
AEON Bank launched publicly on 26 May 2024, becoming Malaysia’s first Islamic digital bank. At launch, AEON ran an introductory 3.88% p.a. profit rate promo on Savings Account-i and Savings Pots until 31 August 2024.
After the promo, AEON communicated ongoing profit rates for Savings Account-i and Pots that varied by product and campaign. AEON has since expanded into Personal Financing-i, Term Deposit-i and AEON Bank Biz for SMEs. It is also a PIDM member
Side-by-side snapshot
| Feature | KAF Digital Bank | AEON Bank |
|---|---|---|
| Shariah status | Fully Islamic digital bank | Fully Islamic digital bank |
| Public launch | 8 Aug 2025 | 26 May 2024 |
| Returns on savings | Hibah (discretionary). Historical display: 5.00% p.a. on first RM2,000, 3.00% above RM2,000 during specific weeks in Jun–Aug 2025 | Profit rate promotions at launch 3.88% p.a. on Savings Account-i and Pots until 31 Aug 2024; subsequent rates vary by product and campaign |
| Card & payments | Visa Debit Card-i, DuitNow QR, biometric log-in | AEON Bank x Visa Debit Card-i, DuitNow QR, budgeting tools, Savings Pots |
| Business banking | Not publicly launched at time of writing | AEON Bank Biz live (Business Current Account-i with cash management) |
| Protection | PIDM up to RM250,000 per depositor per member bank | PIDM up to RM250,000 per depositor per member bank |
What the hibah model means for yo
If you prefer predictability, note that hibah is not guaranteed. An Islamic bank may grant hibah as a goodwill gift on deposits placed under certain Shariah contracts, but it is not a pre-agreed profit rate. KAF currently shows historical hibah levels, which can guide expectations, yet they can be revised at the bank’s discretion.
Savers who want fixed profit rates may prefer Term Deposit-i products, which are commonly offered by banks such as AEON Bank, subject to campaign rates and tenure. Always check the latest product disclosure sheets in-app before you move savings.
Is your money protected
Yes, provided the bank is a PIDM member. Both KAF Digital Bank Berhad and AEON Bank (M) Berhad are listed PIDM member banks. Coverage is up to RM250,000 per depositor per member bank, combining principal and any return. If you hold deposits with different PIDM member banks, coverage applies separately to each bank.
Who should consider KAF vs AEON Bank
Pick KAF Digital Bank if you like the hibah approach, want to try a new Islamic-only app experience and you value integration potential with lifestyle or SME ecosystems via KAF’s tech partners. Watch the app for evolving features after the cooling-off period and monitor weekly hibah history to judge consistency.
Pick AEON Bank if you want a more established Islamic digital bank with Savings Pots, budgeting tools, Term Deposit-i, Personal Financing-i and SME banking through AEON Bank Biz. If you shop with AEON, the AEON points tie-ins can sweeten the deal.
Practical sign-up notes
KAF’s app requires Android 13+ or iOS 16+. During onboarding, you may need to transfer a minimum RM10 from a bank account in your name at a traditional bank to activate the account and you may face initial daily and monthly transaction limits until you upgrade to the Premium tier. AEON’s app is widely available and continues to add products over time. As always, confirm the latest eligibility, limits and fees in each bank’s product disclosures before committing funds.
The bottom line
Malaysia’s digital banking market is finally filling out. With KAF Digital Bank joining AEON Bank on the Islamic side, consumers now have a choice of two fully Islamic digital banks, each protected by PIDM and operating within Bank Negara’s framework. If you value Shariah compliance and app-first convenience, both are credible options.
Your choice comes down to the kind of returns you prefer on savings, the breadth of products you need today and how each app fits your daily spending and business needs. Compare hibah history against fixed profit rate offers, look at fees and limits and split your savings across member banks if you want to optimise PIDM coverage.
