The Islamic financial technology (fintech) industry in Malaysia has reached maturity and will continue to grow in the coming years through the development of policies, technology and talents to support the ecosystem.
The Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) president Mohd Muazzam Mohamed said the industry is more mature here compared to other countries, with assistance from Bank Negara Malaysia (BNM) and government agencies such as the Malaysia Digital Economy Corporation (MDEC).
“We must also give credit to the availability of resources and our talents, as well as the fact that Malaysia has a good base where the talent and financial services can be exported,” he told a media conference on the upcoming Global Islamic Financial Forum 2022 (GIFF 2022), which will be held in October.
Mohd Muazzam said Islamic finance is the backbone of the economic recovery and growing consumption power and as one of the leading powers of change, it is critical that Malaysia uphold the values and principles of Islamic finance towards achieving common prosperity, sustainability, and inclusivity.
“Social financing also remains a critical mechanism for us to promote social trust, cooperation, and solidarity.
“In Malaysia, through value-based intermediation (VBI)-aligned initiatives, we have contributed significantly to our country’s socio-economic recovery during the COVID-19 pandemic by distributing social finance to the vulnerable segment, particularly the B40s and the micro, small and medium enterprises (MSMEs),” he added.
According to Moody’s, the economic recovery in key Islamic finance markets would boost credit growth and demand for Shariah-compliant products, and Islamic banks’ asset growth is expected to continue to outperform their conventional peers.
The economic recovery is also driving an increase in Muslim consumption power, with the world’s population of 1.9 billion (Muslims) spending the equivalent of US$2 trillion in 2021 across the food, pharmaceutical, cosmetics, fashion, and travel sectors.
Muslim spending is forecast to reach US$2.8 trillion by 2025, Moody’s said. Citing the Global Islamic Economy Indicator, the rating agency said Malaysia remains the global leader in Islamic finance and is ranked first among 81 countries for the ninth consecutive year.
Meanwhile, the chairman of GIFF 2022 Arsalaan Ahmed said there are three key developments that would further strengthen Malaysia’s leadership in the sector. “Firstly, the Financial Sector Blueprint 2022-2026 aims to advance value-based finance through Islamic finance leadership.
“Secondly, the issuance of digital banking licenses will accelerate the deployment of new technologies to serve the unbanked and underserved communities, and lastly, islamic fintech is growing exponentially in Malaysia with 33 per cent of the world’s islamic fintech companies headquartered here,” he said.
AIBIM vice-president Datuk Mohamed Rafique Merican Mohd Wahiduddin Merican said the issuance of the digital banking licenses would definitely require the Islamic fintech to up its game.
“We saw in the last two years during the pandemic for example, that we were able to actually serve the needs of our customers better during the lockdown because we invested in those platforms. “With the digital bank licence, we can actually serve you on a more personalised basis as opposed to the current way of going to our branches. The way we serve has started to evolve,” he noted. BNM in April announced five successful applicants for digital bank licences.—New Straits Times