Fintech can boost Islamic finance

Fintech can enable Islamic finance players to attract more customers, increase efficiency and reduce costs

By SULHI KHALID / Pic By TMR File

FINANCIAL technology (fintech) has the ability to help the Islamic finance sector become more competitive without compromising on profitability, said Deputy Finance Minister Datuk Amiruddin Hamzah (picture).

Fintech would enable Islamic finance players to attract more customers, increase efficiency and reduce costs, he said.

It is an opportunity that the Muslim world should not miss out on as fintech has a lower barrier of entry, which allows the youth to jump into the larger financial industry and start their own businesses.

“In the recent past, many people labelled fintech as a threat or disruptive to Islamic finance, but we have found that fintech is a great complementary layer of services that enhances the ability of Islamic finance to reach a larger audience and market.

“The beauty of fintech is, it can be customised and modified in many different ways to allow us to create new Islamic financial services that would be very difficult to create within the banking industry,” Amiruddin said in his keynote address at the Global Islamic Fintech Summit in Kuala Lumpur yesterday.

According to the deputy minister, Malaysia continues to be the main driver of the global sukuk market.

Total global outstanding sukuk as at the first half of 2019 (1H19) stood at US$466.8 billion (RM1.95 trillion), of which Malaysia represented 49.7%.

In 2018, more than US$500 billion of remittances were transferred to low-income countries alone.

“Meanwhile, in the Asean region, remittances received from abroad contribute to more than 5% of some of these countries’ GDP,” Amiruddin added.

The region has also quickly caught on to the method of making payments by scanning a QR (quick response) code, he said.

Eighty-one percent of Asean countries are aware of the QR payment system, while 75% are interested in using them, according to a recent study by Visa.

Meanwhile, 70% of Malaysian consumers prefer to visit merchants that accept digital payments compared to those that only accept cash, the Visa Consumer Payment Attitudes Study 2018 revealed.

Amiruddin also urged industry players to continue upholding the principles of Islamic finance by practicing ethical standards and moral and social values, while embracing innovation and technology.

“Malaysia has a number of institutions and initiatives that support tech start-ups and entrepreneurs to come here and build up their companies and grow from Malaysia all the way to the international market.

“We hope such facilities will be attractive to the upcoming future fintech unicorns,” he said.