Several fintech start-ups are eyeing an Islamic digital banking license to operate in one of the most sophisticated Shariah finance jurisdictions in the world, as the regulator prepares to release its virtual banking guidance before the year ends.
At least one-fifth of the parties interested in setting up a mobile-only bank in Malaysia would build their business on a Shariah proposition, IFN Fintech has learned.
Bank Negara Malaysia (BNM) is expected to unveil its digital banking framework in December which will also accommodate Shariah banking operations. It is learned that over 10 institutions comprising incumbent traditional financial players and new disruptors from both the local market and foreign shores have expressed keen interest in securing a digital banking license in Malaysia.
Responding to queries from IFN Fintech, Suhaimi Ali, the director of financial development and innovation at BNM, confirmed that from this pool of interested institutions, there are several keen on an Islamic digital banking license, stopping short of divulging names and exact numbers. IFN Fintech can, however, confirm that at least two start-ups are eyeing licenses to serve the Muslim segment.
“The number of licenses [to be issued] depends on the value proposition they bring,” shared Suhaimi, who also explained that the regulations, which are already more than 50% ready, incorporate business models from various markets including those in Europe and in Australia. “We are planning to issue a consultation paper by the year-end for comments and then we will fine-tune the rules.”
If things were to go smoothly, this means that ASEAN’s fourth-largest economy by GDP could potentially welcome its first fully digital Islamic bank earliest in the second half of next year. This would certainly add another string to its bow following the country’s extension of a crowdfunding license two years ago to NusaKapital, which has the distinction of being the first Shariah crowdfunding platform anywhere in the world to be regulated, and the greenlight given to Ethis Ventures to operate as the first regulated Islamic peer-to-peer financing platform earlier in May.