KUALA LUMPUR, April 5 ― Malaysia has the potential to be a world leader in Islamic financial technology (fintech), according to research agency BMI.
The Fitch Group unit said further developments from the government, the central bank and support from the country’s sound telecommunications will give Malaysia the boost needed to grow Islamic fintech.
“In particular, we believe that Malaysia has the potential to be a leader in the Islamic fintech sphere due to its strong Islamic banking sector framework and expertise,” it said in a statement today.
The research firm said Malaysia’s Islamic banking sector was worth US$202 billion last year, while its Islamic loans also more than doubled to 30.2 per cent the same year, compared to just 7.8 per cent a decade ago.
BMI noted Malaysia has a developed infrastructure, an increasingly affluent and tech-savvy population, and high mobile and broadband penetration rates coupled with fast internet speeds.
It further noted the government’s investment to build up its digital economy which contributed 17.8 per cent to the GDP in 2016 and is set to hit 20 per cent in two more years.
“We thus believe that the Malaysian government’s ongoing push to develop the digital economy will provide tailwinds to the fintech sphere, with the government viewing fintech as a crucial part of the broader push,” BMI said.
“The signing of a Memorandum of Understanding (MoU) by MIMOS and the International Center for Education In Islamic Finance (INCEIF) to develop a blueprint for an Islamic finance-based investment technology is likely to lay the foundation for the development of Islamic fintech in Malaysia,” it said.
INCIEF was established by Bank Negara Malaysia to build up talent and expertise in Islamic finance, while MIMOS is the country’s leading applied research and technology development agency.
BMI noted that MBSB is expected to launch fintech capabilities in the third quarter of this year and internet banking by the end of 2018, enabling customers to acquire wealth management products, trade facilities and real estate online.
“We believe that these efforts will also be supportive of the overall banking sector over the coming years and forecast loan growth to average 6.5 per cent over the next five years,” it said.