Malaysia’s Islamic Fintech will continue to grow, says banking association

In April, BNM announced five successful applicants for digital banking licences. — Photo by Yusof Mat Isa

Saturday 24 September 2022 11:48 MYTH

KUALA LUMPUR, Sept 24 — 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 talent to support the ecosystem.

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 said at a media conference at the upcoming Global Islamic Financial Forum 2022 (GIFF 2022), which is held in October.

Mohd Muazzam said Islamic finance is the backbone of economic recovery and increasing spending power, and as one of the leading forces of change, it is imperative that Malaysia uphold the values ​​and principles of Islamic finance to achieve shared prosperity, sustainability and inclusion.

“Social finance also remains a critical mechanism for us to promote social trust, cooperation and solidarity.

“In Malaysia, through Value Based Intermediation (VBI) tailored 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 B40s and Micro, Small and Medium Enterprises ( MSMEs),” he added.

According to Moody’s, the economic recovery in key Islamic financial markets will boost credit growth and demand for Sharia-compliant products, and Islamic banks’ asset growth is expected to continue to outperform their conventional competitors.

The economic recovery is also driving an increase in Muslim spending power, with the world’s population of 1.9 billion (Muslims) spending the equivalent of US$2 trillion (RM9.2 trillion) in 2021 on food, pharmaceuticals, cosmetics, fashion and travel. sectors.

Muslim spending is forecast to reach $2.8 trillion by 2025, Moody’s said.

Citing the Global Islamic Economy Indicator, the rating agency said Malaysia remains a world leader in Islamic finance and is ranked first among 81 countries for the ninth consecutive year.

Meanwhile, GIFF 2022 chairman Arsalaan Ahmed said there are three key developments that will further strengthen Malaysia’s leadership in the sector.

“First, the Financial Sector Blueprint 2022-2026 aims to promote value-based finance through Islamic financial management.

“Secondly, the issuance of digital banking licenses will accelerate the deployment of new technologies to serve the unbanked and underserved communities, and finally, Islamic fintech is growing exponentially in Malaysia with 33 percent 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 step up its game.

“For example, we saw in the last two years during the pandemic that we were actually able to better serve the needs of our customers during the shutdown because we invested in these platforms.

“With the digital banking license, we can actually serve you on a more personal basis as opposed to the current way of going to our branches. The way we do business has started to evolve,” he noted.

In April, BNM announced five successful applicants for digital banking licences.

The Global Islamic Finance Forum 2022 (GIFF2022) will be held from October 5 to October 6 in Kuala Lumpur.

GIFF2022 is organized by AIBIM, in support of the Malaysia International Islamic Financial Centre. — Bernama