Malaysia’s central bank has said that the country is the ideal ‘test bed’ for developing financial technology (fintech) solutions.
Marzunisham Omar, the assistant governor at the Bank Negara Malaysia, explained that the growth of the sector has provided innovative opportunities within the financial industry.
At its core, fintech has led to the creation of various business models that help improve and simplify financial transactions, which 10 or 20 years ago seemed impossible.
In a report from The Edge Markets, digital consumers in Asia will rise from the current 670 million to around 1.7 billion by 2020.
Omar adds that even though Islamic finance within the country is still growing, he believes now is the time for the sector to embrace the ‘fintech wave.’
In Malaysia, our Islamic financial institutions are in a good position to benefit from the growth multipliers that fintech offers. What is required is for the industry to invest in technology and talent to accelerate the adoption of technology.
However, in order to make this a success, Islamic finance players need to rethink their traditional business models and embrace digital transformation, Omar said.
In March, it was reported that Malaysia’s proximity in the ASEAN (Association of the Southeast Asian Nations) region made it the ideal environment for testing and launching fintech solutions for the global Islamic finance market. According to the report, 61 percent or 18.4 million people are Muslims. This provides a unique opportunity for fintech solutions that are compliant with Islamic law.
At the time, Datuk Yasmin Mohamood, chief executive of Malaysia Digital Economy Corp (MDEC), said that Malaysia is among the ‘global key players in Islamic finance.’
Yet, while the country’s central bank is keen to push a fintech agenda, its position on digital currencies is not as clear.
Yesterday, it was reported that Muhammad bin Ibrahim, the governor of the Bank Negara Malaysia, said that a blanket ban on cryptocurrencies was not out of the question. The bank is currently developing guidelines for them. This, however, goes against what Ibrahim said in September regarding a ban.
Then, he said:
We want to ensure that there are clear guidelines for those who want to participate in this sector.
Either way, by the end of the year, the bank is expected to reveal its position on the cryptocurrency market.
Featured image from Shutterstock.