Two more robo-advisors to enter Malaysia in 2020

Robo-advisors are a class of financial advisor that provides financial advice or investment management

by AFIQ AZIZ

MALAYSIA is expected to house two more robo-advisors in the country’s emerging financial technology (fintech) market next year, after the Australian-based firm Raiz Invest Ltd and Thai’s Robowealth Mutual Fund Brokerage Securities obtained the Securities Commission Malaysia’s (SC) approval for operation.

SC executive chairman Datuk Syed Zaid Syed Jaffar Albar (picture) said the companies which were granted approval-in-principle, would join the three fully operational robo- advisors in the country.

The approval, Syed Zaid said, would further facilitate the growth of local fintech landscape.

“Today, Malaysia has three licensed and fully operational robo-advisors — namely StashAway, MyTHEO and Wahed Inc. We continue to see strong interest in this space and will pursue to facilitate its growth,” he said in his opening address at the SCxSC Fintech Conference 2019 in Kuala Lumpur yesterday.

Robo-advisors are a class of financial advisor that provides financial advice or investment management, based on mathematical rules or algorithms via online with moderate to minimal human intervention.

StashAway — a Singaporean-based firm arrived with its artificial intelligence (AI)-enabled investing platform in Malaysia in late 2018, after receiving the inaugural approval by the SC.

The platform is able to cut man hours, which also involves high fees in investment planning. Instead, StashAway leaves the brunt of this work to data-driven AI, which allows them to offer these services for relatively lower costs to the general public.

Robo-advisors emerged in the market following the introduction of SC framework on Digital Investment Management in 2017.

Syed Zaid also said the latest allocation under Budget 2020 could further chart the growth of alternative market-based financing platforms.

In the budget, the Finance Ministry has allocated RM50 million to the Malaysia Co-Investment Fund (MyCIF) to help finance start-ups and small and medium enterprises (SMEs) by co-investing on a one-to-four basis in campaigns listed on equity crowdfunding (ECF) and peer-to-peer (P2P) financing platforms.

“We expect this injection to further spur the growth of our ECF and P2P financing industry, which in turn could catalyse growth in Malaysian SMEs by providing access to alternative sources of financing,“ he said.

According to him, a total of 21 Malaysian ECF and P2P platforms registered with the SC have raised RM587 million for some 1,600 micro, small and medium-sized enterprises since 2016.

“It should be noted that these platforms deploy financing to a diverse range of sectors, including high-tech, education, retail, food and beverage, and consumer products,” he said.

The inclusion of the ECF and P2P platforms in the Malaysian capital market has attracted new investors, particularly those aged 35 and below.

SC has also introduced guidelines for property crowdfunding that provides an alternative financing avenue for first time home-buyers with the registration of the platform have already been made last month.

SC expects the platform to commence its operation soon. On the SCxSC Fintech Conference 2019, Syed Zaid said this year’s event will include Islamic fintech.

“We believe this remains a largely untapped segment in our current ecosystem and I look forward to discussion on (whether) Malaysia’s potential may be unlocked in this area,” he said.