Treasury in transition – Insights from Malaysia’s banking leaders
Malaysia’s economy is enjoying a moment of strength—buoyed by robust domestic demand, infrastructure-led investment, and a rapidly digitizing financial system. But beneath this momentum lies a growing challenge for bank treasuries: credit growth is outpacing deposits, and liquidity is tightening.
At our recent Banking Dinner in Kuala Lumpur, senior banking executives and treasury leaders gathered for a panel discussion on the evolving role of treasury in this dynamic environment. The consensus was clear: modern liquidity, risk, and distribution capabilities are no longer optional—they are strategic imperatives.
From back office to frontline enabler
The panel emphasized that treasury must evolve from a back-office utility to a front-foot franchise enabler. With Malaysia’s loan-to-deposit ratio hovering around 87.6% as of March 2025, banks are under pressure to price liquidity more accurately and respond faster to regulatory shifts. Innovations in data, analytics, automation, and open APIs are key to enabling this transformation.
Macro trends: Growth meets funding pressure
Malaysia’s economic expansion—driven by green energy, data centers, and infrastructure—has fueled corporate and SME loan appetite. However, deposit growth has lagged, creating a structural funding gap. SMEs, while more disciplined post-pandemic, continue to hold liquidity as a buffer, further tightening the deposit base.
Policy measures like Bank Negara Malaysia’s SRR reduction have provided temporary relief, but treasurers recognize these as bridges, not cures. Fiscal reforms and global uncertainties are reshaping cash-flow behavior and risk postures, making real-time liquidity intelligence and stress testing mission-critical.
Technology as a strategic lever
The panelists agreed that the technology gap is now a P&L issue. Treasury modernization is no longer a back-office IT project—it’s a board-level priority. Banks are shifting from siloed systems to integrated platforms that unify front, middle, and back-office functions. This enables real-time risk visibility, faster product rollouts, and improved cost efficiency.
Automation, cloud-native architectures, and API-first designs are transforming treasury operations. Yet, the real challenge lies in data discipline—ensuring consistent, auditable, and analytics-ready data across treasury, finance, and transaction banking.
Distribution at scale: The new frontier
Malaysia’s capital markets have surpassed RM4 trillion, with rising retail participation and demand for structured, ESG-linked, and Shariah-compliant products. Treasuries must now act as both factory and storefront—structuring complex products while ensuring suitability, transparency, and digital distribution.
What good looks like: Operational excellence
From intraday liquidity ladders and stress-testing libraries to real-time P&L explain and automated settlements, the panel outlined what “good” looks like across treasury desks. The message was clear: operational excellence is foundational to strategic agility.
The road ahead: A three-horizon transformation
- 90 Days – Stabilize: Stand up a unified liquidity dashboard and automate high-break workflows.
- 6–12 Months – Industrialize: Migrate core processes to a single platform and implement regulatory data models.
- 12–24 Months – Scale: Expand product factories, optimize collateral, and embed ESG/suitability into digital channels.
Conclusion
Malaysia’s macro tailwinds are real, but so are the liquidity and compliance headwinds. Treasuries that invest now in real-time intelligence, robust risk engines, and digital distribution will not only weather the storm—they’ll lead the next wave of banking innovation.
