IFN Fintech brings you a sneak peak into a recent high-level closed door dialogue with policymakers and industry practitioners on crafting a national Islamic fintech agenda for Malaysia.
Senior industry experts and stakeholders, including a deputy finance minister, are calling for the establishment of a national coordination platform and the appointment of a government agency to catalyze the development of the Islamic fintech industry in Malaysia, seeing it as an essential force to democratize financial access in a nation of 32 million as part of its Shared Prosperity Vision 2030.
In a closed-door dialogue with policymakers, the Islamic banking and finance industry, the fintech community and the non-governmental sector recently where participants deliberated and exchanged insights on the current state of play and the future of Islamic digital financial inclusion, a series of recommendations was made. This included the urgent need to craft a national comprehensive Islamic fintech agenda, which would be executed by a government-backed platform comprising regulators and industry participants.
Many believe that the Special Islamic Finance Committee established by the Malaysian government last August is well placed to take on the role. The Malaysia Digital Economy Corporation (MDEC), which coordinated the high-level engagement in collaboration with IFN, is also seen as the ideal change agent for Islamic fintech given its digital economy mandate and greater commitment to the Shariah fintech sector.
“I strongly believe that Malaysia can develop the ideal ecosystem to support the development of Islamic fintech and champion the Islamic fintech agenda, especially in [the] ASEAN region. However, in order to make this happen, it will depend on the collaborative efforts of the financial regulators, the delivery system, the industry players and the supporting professionals,” Mohd Shahar Abdullah, Malaysia’s deputy finance minister II, shared in his keynote. “I would like to also emphasize that an equally important part of this process is having the right people in place with the appropriate skills, having in place the appropriate systems and governance framework to ensure the viability and sustainability of this industry.”
Although viewed as a pioneering bastion of Islamic finance in the eyes of the world with an impressive track record to boot, Malaysia — many opined — has yet to unlock its full Islamic fintech potential as Dubai, Indonesia and even the UK make their bid to promote themselves as an open and conducive market for Shariah fintech solutions to flourish.
Cognizant that there are gaps in the current infrastructure to fully support the needs of the (Islamic) fintech community, dialogue participants — hailing from the likes of United Nations Capital Development Fund, Indonesia’s National Islamic Finance Committee, Fintech Association of Malaysia, Securities Commission Malaysia, Bank Islam, GlobalSadaqah and microLEAP — however are of the opinion that the Southeast Asian nation is well placed to lead the Islamic fintech-driven financial inclusion endeavor considering its Muslim-majority digital-savvy demographics, sophisticated Islamic finance regulatory architecture, affinity for Islamic social finance tools and strategic geographical and market position as a gateway to ASEAN for international Islamic fintech players. Coupled with its value-based intermediation strategy, formulated by Bank Negara Malaysia for the Islamic finance sector, Islamic fintech for financial inclusion could potentially become the unique selling proposition for Malaysia.
A report detailing recommendations to enhance financial inclusion using Islamic digital social finance from the dialogue will be released soon. The dialogue, the first of two for the year 2020, builds upon a 2019 collaboration between the MDEC and IFN which gathered industry insights and proposals to position Malaysia as an Islamic fintech hub.