18
Finance
@Halal | July-august. 2020
Establishing Malaysia as the Islamic
fintech hub
Malaysia Digital Economy Corporation (MDEC) carries out
digital economy initiatives to help the B40s, M40s and micro SMEs
to embrace and adopt digital technologies
BY CAMILIA REZALI
Digital convergence has widely
altered the way our financial
industry operates. This starts
from shifting how people sort
out their financial investments,
transactions to even managing
their savings.
Digitalisation is not only changing the
financial industry alone, but it is also shifting
all sort of companies from small businesses
to large corporations, and from non-profits
organisations to government agencies to
speak in a universal language of computers.
Technology is ever-growing, and the
only way for industries to grow and expand
especially during this Covid-19 pandemic is
through “digital transformation”.
MDEC’s Vice-President of Fintech and
Islamic Digital Economy Norhizam Abdul
Kadir said the transformation of every single
industry was crucial, especially with the current
economic situation.
“You got to embrace, adopt new digital
technologies to increase business efficiency
and productivity,” he said.
Looking at the growth of the fintech industry
globally, the State of the Global Islamic
Economy Report 2019/20 stated that Islamic
finance had the most significant number in
the world with US$521.3 billion growth.
On top of that, IFN Islamic Fintech Landscape
identified a total of 138 companies
worldwide offering Islamic fintech services
across 11 verticals as at the end of December
2019.
Last year, Malaysia continued to lead in
the Global Islamic Economy Indicator (GIEI)
according to the State of the Global Islamic
Economy Report (SGIE) 2019/20.
Information, IT and Infrastructure hold
the highest percentage in Islamic fintech
with 18 per cent, followed by block chain and
crypto currency (13 per cent) and P2P financing
(12.5 per cent).
Although Malaysia has continuously been
ranked No 1 in the Global Islamic Economy
Index, Norhizam believed there were still
gaps in financial inclusions that needed to
be addressed, especially for those who are
under served.
Even if 95 per cent of Malaysians own a
deposit account, there are still a portion of the
B40s group whom do not have bank accounts
yet.
“This is common in emerging markets
where disciplines of wealth may not be well
distributed. The divide between the household
income between T20s and the B40s is
widening wherein this community is facing
economic inequality,” he said.
Another concern is the lack of financial
knowledge among Malaysians. From a
Financial Education Network Report called
the Malaysia National Strategy for Financial
Literacy published by Bank Negara, one out of
three Malaysians rate themselves to be low in
financial knowledge.
Islamic finance applies a different
approach from conventional banks when it
comes to financing and investment matters.
There are different products and services
developed by these Islamic financial institutions
to meet customers’ needs.
Bringing players together
Islamic financial products and services are
very trusted. However, it is not properly
understood due to the reduced level of
financial knowledge among Malaysians.
In addressing these issues in the
fintech industry, there are a number of
initiatives by MDEC.
Some of the initiatives are through
platforms such as eRezaki, eUsahawan, GLOW
and Tech Talent Development.
e-Usahawan is not just about digitalisation.
It is also about teaching on how to get
access to e-commerce business and capital
markets while eRezekienables citizens, especially
low-income groups, generate additional
income by doing digital assignments via
online crowd sourcing platform.
Besides providing such platforms, MDEC
also introduced the concept of Orbit. This is
where players in the financial industry are
brought together.
Norhizam said one of the critical purposes
of Orbit, a fintech hub, was to help fintech
startups gain access to regulators. This is done
through the quarterly Regulatory Bootcamp,
which generally also sees participation from
both Bank Negara Malaysia and the Securities
Commission Malaysia.
“The one we have now is in partnership
with the United Nation’s Capital Development
Fund. There is an Orbit where we take
Malaysian companies to help United Nations
drive financial inclusions not only in Malaysia
but also to all other emerging markets
across the network of the United Nations,”
said Norhizam.
MDEC also focusses on on assisting
companies in financial support as well as
introducing robo-advisors to assist the B40s
in opening financial investment accounts
and receiving financial advice.
MDEC works closely with companies such
as Aspirasi, Micro Leap and other venture
capital firms to support and facilitate micro
“You got to embrace,
adopt new digital
technologies to increase
business efficiency and
productivity.”
— Norhizam Abdul Kadir
financing, especially for micro SMEs and
‘Makcik Kiah’ kind of individuals.
It is done with different sets of ‘KYC’ which
includes the use of social media, mobile and
e-commerce platforms. Investment platforms
such as Wahed Invest, StashAway, HelloGoldand
Luno are also included.
“We are also supportive of the initiatives
from larger organisations like TM, Angkasa,
Post Malaysia and MARA. For example, Angkasa
has come out with an initiative called
MyAzZahra which is an is an electronic
online application system developed for all
cooperatives under the umbrella of Angkatan
Koperasi Kebangsaan Malaysia Bhd (ANG-
KASA),” said Norhizam.
On the issue of the shortage of talent, the
said areas like data analytics is seen as the
most crucial area which requires good talent
and this needed to be addressed soon. For
this, MDEC is working closely the Ministry
of Education to work with the schools and
universities to introduce digital studies in
education.
“We are also working with the institutions
of higher learning on a programme called the
‘Premier Digital Tech Universities’ where
we work with faculty members to look at
developing latest and relevant-to-industry
programmes such as computer science, programming,
coding as well as the convergence
of other verticals,” Norhizam said.
On top of that, there is an initiative called
#MyDigitalMaker where skills such as app
development, robotics and 3D-printing
are taught and developed by students and
teachers.
Having these approaches, MDEC is confident
the nation will generate more talent in
the fintech industry.
For Islamic financial inclusion to have an
impact on the nation’s economic empowerment,
livelihoods and broader welfare effects,
MDEC is working with all the relevant agencies
and partners to make this happen.