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Cover Story
@Halal | may-june. 2020
Championing
Islamic fintech
agenda
The Malaysia Digital Economy
Corporation (MDEC) plans to establish
a leading body at a national level to
champion the Islamic fintech agenda
mDeC InTenDS to position Malaysia as an
early-stage Islamic fintech start-up hub to
attract local and foreign start-ups to anchor
regional operations in the country and use
Malaysia as a gateway to Asean.
“We want to build an inclusive fintech
ecosystem. It will comprise Islamic fintech
start-ups, corporates, non-governmental
organisations (NGOs), Shariah banks, Islamic
asset managers and practitioners in the
Zakat, Waqf and Sadaqah space,” Chairman
Datuk Dr Rais Hussin Mohamed Ariff said.
“We also want to develop a local talent
base and improve the awareness and
understanding of Islamic fintech among
stakeholders, especially investors and
corporates.”
MDEC also wants to encourage B2B
collaboration between Islamic banks to
conduct research and development and
support the Islamic fintech ecosystem.
It will establish an effective mechanism
to address regulatory grey areas and utilise
existing tools or establish new ones to
facilitate private investments into Islamic
fintech.
On whether there was a need to rethink
Malaysia’s approach to Islamic Fintech, Rais
said the wide variety of Islamic FinTech and its
diversified business plans make it challenging
for regulators to build up a one-size-fits-all
regulatory framework.
The government thus needs to think of
providing supportive regulations for the
Islamic fintech sector.
“Not too loose or too strict. The tooloose
regulation will result in problems such
as negligence of customer protection and
privacy while the too-strict regulation may
hamper the development of Islamic fintech.
“The rules should protect all parties
involved in the Islamic fintech practice,
namely, the firms, customers, and investors,”
Rais added.
He said another challenge was the threat
to information security and privacy. It was
imperative as for the consumer; trust is
everything. The adequacy of current security
standards and protocols is questioned
considering the high number of cybersecurity
events in recent years.
“There should be a rethink of two
important matters. Regular meetings and
engagement between the regulators and
fintech stakeholders in the early stage of
regulatory development are very crucial and
necessary in building clarity and a secure
environment.”
Rais said the growth rate of Islamic finance
in Malaysia was impressive by any standard.
However, to encourage more industry
stakeholders across different sectors in
MDEC’S KEY ISLAMIC FINTECH INITIATIVES:
• To establish a leading body at a
national level to champion the
Islamic fintech agenda.
• Position Malaysia as an earlystage
Islamic fintech start-up hub
to attract local and foreign startups
to anchor regional operations
in the country and use Malaysia as
a gateway to wider ASEAN.
• Carve an Islamic fintech niche:
Shariah fintech for financial
inclusion.
• Build an inclusive fintech
ecosystem comprising Islamic
fintech start-ups, corporates,
NGOs, Shariah banks, Islamic asset
managers and practitioners in the
Zakat, Waqf as well as the Sadaqah
space
• Develop an Islamic fintech
guidance to establish parameters
of Islamic fintech services, define
roles of stakeholders and market
practitioners.
• Develop a local talent base and
improve the awareness and
understanding of Islamic fintech
among stakeholders, especially
investors and corporates.
• Design and execute coherent
Islamic fintech brand and amplify
accordingly.
• Encourage B2B collaboration
between Islamic banks to conduct
research and development and
support Islamic fintech ecosystem.
• Utilise existing mechanisms or
establish new ones to facilitate
private investments into Islamic
fintech.
is critical in driving Digital Islamic
Services opportunities, adoption and
growth.
How do you get more industry
stakeholders across different
sectors to enhance the growth
of Islamic finance in Malaysia?
Our Islamic finance system
has been growing tremendously
for the past
few years, from retail to
commercial Islamic
banking and finance,
to general and
life takaful
insurance and to sectors of the Islamic capital
market. So, it is not difficult to continue
encouraging it if the approach for Islamic
finance is appropriate.
The related authorities should improve
shariah governance through research and
development. Besides, the infrastructure
to support further development of the
Islamic financial industry in addressing the
institutional capacity for the national and
international levels should be strengthened
to avoid any complications and people’s
reluctance to take part in Islamic finance.
MDEC is providing skills training designed
to bring in additional income avenues for
Malaysians. How has the response been?
The response has been immensely great
because the skills training offered by MDeC
has helped many people generate extra
income through various opportunities.
This is through MDeC’s collaboration
with a lot of companies to help individuals,
entrepreneurs and businesses mainly