Malaysia has the potential to be the world leader in Islamic financial technology (fintech) as it has shown a steady growth in fintech investments and activities, according to a report prepared jointly by the International Centre for Education in Islamic Finance (INCEIF) and two other organisations.
The newly launched report titled “Islamic Fintech in Malaysia: Reality & Outlook” said Malaysia has become one of the fastest-growing fintech markets in South-east Asia with nearly 200 local and foreign fintech companies operating in the country as of September 2020.
“The majority of Malaysian fintech activity has been concentrated in the wallets and payments space, where mobile and e-commerce has led to real demand from underserved consumers and merchants.
“This trend has also been supported by Bank Negara Malaysia’s agenda to accelerate the country’s transition to electronic payments and thus quicken the pace for the country to realise the consequent cost savings and other various benefits,” INCEIF said in a statement today.
INCEIF, in collaboration with the International Shari’ah Research Academy and Malaysia Digital Economy Corporation (MDEC), prepared the report which explores the landscape of the fintech ecosystem in Malaysia and potential of the country to be a global Islamic fintech hub.
“Malaysia’s robust regulatory environment, comprehensive fintech landscape, supportive Islamic finance community, and the government’s commitment to champion the Islamic economy has already paved the way for Malaysia to be a global Islamic fintech hub.
“With such vision and advantages, Islamic fintech start-ups in Malaysia can secure long-term growth prospects by scaling up to serve the global Islamic economy, consisting of almost 1.8 billion people around the world,” it said.
INCEIF president and chief executive officer (CEO) Prof Datuk Mohd Azmi Omar said Islamic fintech holds the potential to provide inclusive and sustainable financial solutions that can uniquely cater to the financial needs of all segments of the society.
“With the adversity created by the Covid-19 pandemic, developing Islamic fintech is now more crucial than ever before, specifically in catering to the financial needs of the small and medium enterprises and the B40 community,” he said.
ISRA executive director Prof Mohamad Akram Laldin said although Islamic fintech is still in its early stages of progress, it has a great potential of exponential growth if a conducive ecosystem is achieved.
“For that, Malaysia has a great advantage in leading the global industry in Islamic fintech by leveraging on its position as an Islamic finance hub and intensifying its efforts in value-based and sustainable financial solutions,” he said.
Meanwhile, MDEC CEO Surina Shukri said: “Today, we are one of the fastest-growing fintech markets in South-east Asia. This has contributed to Malaysia being ranked the No 1 Islamic economy globally by the State of the Global Islamic Economy Report 2020/2021.
“With all these achievements in place, together with the efforts of agencies like us (MDEC) in growing the ecosystem, we are confident that Malaysia is poised to be Asean’s Islamic fintech hub, further strengthening our goal to position the country as the Heart of Digital Asean.”