fintech in malaysia

Fintech is coming to represent technologies that are disrupting traditional financial services, including mobile payments, money transfers, loans, fundraising, and asset management. Services such as mobile payments, and money transfer services are revolutionising the way we live.

Let us take a look at the role of fintech in improving the capabilities of financial sectors in Malaysia. 

What is Fintech?

Fintech stands for Financial Technology. It refers to technologies used and applied in the financial sector which enhance and automate the delivery of financial services. 

Fintech can help companies, business owners and consumers by managing their financial operations, processes and use specialised software and algorithms that are applied on computers and smartphones.

Hailed as the latest innovation of the 21st century, fintech has been shifting to more consumer-oriented services, and presently, involves different sectors and industries such as education, retail banking, fundraising and investment management. 

Meanwhile in Malaysia, fintech is still developing and growing promptly along with the Industrial Revolution 4.0.

How Financial Technology Works?

Fintech has been utilised for various technologies and the combination of the latest technological developments in financial services or applications. 

Nonetheless, it works by using the Internet, mobile devices, software technology and cloud services to integrate to consumers’ financial profiles.

Fintech disrupted the banking industries by developing dozens of applications and services to ease consumers access to their finances.

Consumers now can manage their funds, trade stocks, food payment and handles their ins merely through their smartphone.

Below is a list on how fintech being used in the industry:

1. Crowdfunding Platforms

It allows users to send or receive money from others in regards to funding for a cause, business ventures or donations. Fintech solves the payment collection by enabling funders to pay instantly without the hassle.

2. Blockchain and Cryptocurrency

Blockchain and cryptocurrency are one of fintech’s leading applications in investment.

Fintech connects users to buy and sell cryptocurrencies. 

Meanwhile, the blockchain services such as Blockverify, helps to lessen the fraud because it has original source data keeping on the blockchain. 

3. Mobile Payment

This allows consumers to exchange their money and make an online payment from their smartphones including through the famous payment app, Venmo.

With Venmo, you can send money and make purchases at approved merchants at your fingertips. 

4. Insurance

Insurtech has been taking over the insurance industry from car insurance to home insurances and data protection.  

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Insurtech start-ups even increasingly attract funding and this can be seen through the insurance start-up Oscar Health that has secured $165 million in funding since March, 2018.

5. Robo-Advising and Stock-Trading Apps

Robo-Advising is providing algorithms, which are based on asset recommendations and portfolio management to increase efficiency and lowered costs.  

The example of online robo-advising services are Charles Schwab (SCHW), Betterment and Ellevest. 

Meanwhile, stock-trading apps are massive innovations in Fintech as investors can buy and sell stocks through their mobile devices, rather than the conventional methods of going to the stock exchange.

6. Budgeting Apps

With fintech, it allows consumers to keep track of their own budgets, incomes, expenses and more on their mobile devices.

Interesting Facts about Fintech in Malaysia.

Both Asia Institute of Chartered Bankers (AICB) and PWC Malaysia collaborated on the venture to develop a Malaysia Fintech report. Based on Fintech Malaysian report 2018, fintech space had 166 Fintech Malaysian companies operating in the country.

Although there is a concern about the impact of fintech to Malaysian Financial Industries (FI’s), most companies are ready to embrace fintech.

In Malaysia, there are over 40 licensed e-money operators that provide cryptocurrency exchanges, peer to peer financial equity crowdfunding and Fintech sandboxes.

The merchants in Klang Valley are even thriving with accepting at least one e-wallet payment by displaying e-wallet stickers on façade. The Malaysian people are more attracted to freebies and promotions offered before signing up for e-wallet.

Most 50% of the population stated Malaysian digital companies are a work of progress but 98% calling for organisations to provide safe and secure online transactions.

What is a regulatory Sandbox?

It is a programme running for several months, allowing early stage-fintech startups to test out offerings in a limited market environment, under regulations, supervisions. All in which be done without having to be fully licensed.

It’s a regulatory approach allowing testing of innovations under certain regulations.

What does it do?

Regulatory sandbox allows the testing of new financial products, technologies and business models with set of rules and safeguards. 

Payment and e-wallets made up 19% and 17% of fintech players respectively, 12% cryptocurrency players and 6% crowdfunding companies.

Bank Negara Malaysia on Fintech 

The Financial Technology Enabler Group (FTEG) was established by Bank Negara Malaysia (BNM) in 2016 to help innovations to improve the quality, efficiency and accessibility of financial services in Malaysia. 

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Comprising of cross functional group within BNM, the FTEG is responsible for formulating and enhancing regulatory policies to facilitate the adoption of technological innovations in the Malaysian financial services industry.

Fintech Regulations in Malaysia

Fintech in Malaysia not only has to obey rules and regulations of Malaysia, but also has to take Shariah-compliant initiatives for consumers who prefer it.

To add, Fintech has to obey cyber security laws or regulations in Malaysia that includes;

  1. Communications and Multimedia Act 1998;
  2. Communications and Multimedia Commission Act 1998;
  3. Computer Crimes Act 1997;
  4. Copyright Act 1987.
     

How Fintech Affect Banks?

Interestingly, fintech influences how the local banks are operating currently. The fintech’s revolutionary approach into the industry is actually to make banking easier and more customer friendly.

Malaysian banks are keeping up with the global trends in fintech, including developments in payments, compliance and landing.

More collaboration is expected to occur between fintech players and banks in areas such as know-your-customer (KYC) processes, anti-money laundering and identity management – facial and voice recognition.

We can see the changes are happening in local banks. CIMB Bank Bhd has collaborated with Ripple for blockchain enabled remittance services. HSBC Bank Malaysia is pushing for blockchain based trade finance platform.

Maybank has launched its digital wallet and QR Pay option in 2016, where it is easily spotted at retail stores nowadays.

Based on a global survey (2018), 43% banks had a digital plan. However, only 19% felt that it gives a positive impact to advance their business. 

Over the next 5 years, 90% of banks anticipate growth in utilising mobile application to be much higher than other financial sectors.

Nonetheless, fintech does offer their services using social media as a main medium to connect, engage, inform and understand customers, just like bank offerings. 

It offers on:

  • Solution on consumers’ problems – unable to get loans with no or poor credit scores.
  • Peer to peer marketplace – unable to secure loans from traditional sources
  • Personal finance management tools

These fintech start-ups are competing with each other to offer various services. However, Malaysian banks are still facing the challenges to implement fintech such as:

1) Bank Negara to come up with many regulatory requirements and other banks trying to comply by using technology.

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2) Seeking compliance and landing areas.

3) To incorporate artificial intelligence (Ai) and machine learning by using Regtech (that is popular among local banks).

4) The wealth management – to see incorporation of robo-advisors in private banking settings.

5) Alternative scoring data – to enable the function. 

Despite all of this, banks still think fintech is lacking on its IT security and regulatory certainty. It is believed that fintech has encountered difficulties working with banks due to the differences in management, culture and operational process.

Nonetheless, the future of Malaysia’s fintech seems bright as customers see the benefits of this technology.

Tricubes Solutions

Tricubes is a leading technology company that provides technology solutions for organisations. It aims to help organisations to adapt quickly to the changing business environment.

As an IT company in Malaysia, Tricubes offers various services that specialise in identity authentication solutions, enterprise mobility solutions and IT maintenance services.

1. Identity Authentication Solutions (IAS)

Tribute’s Identity Authentication Solutions (IAS) is being utilized at national borders, access controls and facilities management in offices, MyKad programs and airports.

Thus, IAS is the answer to biometric based solutions for organizations with security demand.

Its sets include:

  • Logical access.
  • Hardware application.
  • Software application for physical access.
  • Network security control – through biometric and smart card technology.

Case studies involving IAS:

  • Government Multipurpose Card
  • Mobile Banking Pin Issuance

2. Enterprise Mobility Solutions (EMS)

Enterprise Mobility Solutions (EMS) is known to be the most disruptive technology innovation to hit enterprises. It helps companies to carry out tasks and bridge out to customers functionally yet affordably via a smartphone.

Tricubes apply a middleware solution, Mobile to Enterprise (M2E) as the transition from conventional platform to the ever-growing mobile platform choices.

Case studies involving EMS:

  • Mobile Enforcement (City Hall)
  • Utility
  • Oil & Gas
  • Smart Building
  • Airlines
  • Banking

3. IT Maintenance Services (ITMS)

Tricubes engineers manage the lifecycle of physical assets to maximise their use, improve quality and efficiency, at competitive prices. Our experience and engineering capabilities have put us in a unique position to address customer requirements.

Support Offerings:

  • Desktop System Maintenance
  • Biometrics System Maintenance
  • Maintenance of Smartphones and Mobile Devices
  • Campus Wide Integrated Security system

Case studies involving ITMS:

  • Campus Wide Integrated Security System

To learn more about Tricubes solutions, email us at [email protected] today.