Industry stakeholders in Malaysia have identified four key priorities and six strategic recommendations to facilitate an effective Islamic fintech funding ecosystem in Malaysia.
These focus areas were the outcome of a high-level industry dialogue hosted by IFN Fintech and supported by Malaysia Digital Economy Corporation last year.
The Malaysian government has identified Islamic fintech as a strategic avenue to further bolster its global Islamic economic standing and as a source of economic growth. There is much to gain from developing this area. However, establishing a vibrant supportive ecosystem is a collaborative exercise involving many moving components, with funding as an instrumental factor of success for any start-ups.
The importance of a robust funding mechanism was highlighted during the first two dialogues under the Malaysian Islamic Fintech Initiative. A survey with 200 Islamic fintech start-up CEOs and founders from across the world conducted by IFN Fintech in June 2021 found that funding remains the biggest hurdle faced by Islamic fintech start-ups, a persistent concern that was also highlighted by the start-ups in 2020.
To address this perennial issue, the third instalment of the Malaysian Islamic Fintech Initiative focused on mobilizing funding for Islamic fintech start-ups, who find it twice as hard to secure funding due to a myriad of factors including a lack of Islamic finance awareness and understanding from investors. These prevent Islamic fintech start-ups to grow and scale up to serve the financial inclusion agenda. The closed-door dialogue was participated by international and domestic players.
- Malaysia is a promising emerging ASEAN fintech start-up ecosystem
- Start-ups need to create and amplify brand story
- Investors still unclear about differences between Islamic and conventional finance
- Scarcity of Islamic investment capital remains a hurdle
- There is more than one source of funding
- Access to human capital as important as access to funding
Key focus areas
- Better prepare Islamic fintech start-ups
- Amplify awareness
- Broaden funding pool
- Built the number of Islamic fintech start-ups
- Establish Islamic fintech and incubation programs
- Generate awareness and amplify Islamic fintech success stories
- Capitalize on ESG alignment
- Involve agnostic players – start-ups and investors
- Expand alternative funding options
- Build talent pool
The full report can be downloaded here.