For fintech to thrive and reach its full potential, Malaysia must establish a conducive and comprehensive fintech ecosystem where all industry participants work towards the same goals, said Datuk Wira Dr Hj. Rais Hussin Mohamed Ariff, chairman of Malaysia Digital Economy Corporation (MDEC), the government agency driving digital transformation and adoption.

Speaking at the first episode of the Orbit Talk Series on July 23,  Datuk Wira Dr Hj Rais Hussin cited the case of tech giant Grab, a startup originally from Malaysia but which later moved to Singapore after failing to raise much-needed funding in its native country, stating that Malaysia mustn’t reproduce the same mistake and focus on creating a supportive ecosystem.

“When we talk about supporting and enabling fintech, the ecosystem that we are providing must be complete; not just the financial means or funding means, but also the talent, the regulatory support,” Datuk Wira Dr Hj Rais Hussin said. “Otherwise, you will attract some good guys and then after some time, the good guys will get three or four knocks, look for other places, and eventually go. That’s how you lose companies like Grab.”

Collaboration, communication, and empathy must be emphasized and all industry participants must work collectively to build the foundations and capabilities to allow young, innovative entrepreneurs to push their ideas to the next level, he said.

“The ecosystem has to be a comprehensive ecosystem right from the government incentives, the regulatory framework, to the funding capabilities, or at least enabling funding capabilities,”  Rais Hussin explained, noting that such ecosystem must be built on continuous engagement with industry players.

“You cannot work in siloes, in an ivory tower. Those days are gone. When everybody’s views are taken into consideration, and try to help each other … only then you can complete the ecosystem … and then the Grab incident will not happen again.”

Fintech, a key element in Malaysia’s national digital push, should have its own dedicated strategy that drives the whole industry, “some kind of focus and overall vision,” Rais Hussin added.

Opportunities in Islamic fintech

One particular industry where Malaysia could become a world pioneer in is Islamic fintech.

Already a world leader in Islamic finance, Malaysia is in a strong position to harness Islamic fintech opportunities, Rais Hussin said.

According to figures from the International Monetary Fund (IMF), Islamic bank loan growth expanded by 8.9% year-on-year in 2018, compared to only 2.5% for conventional banks, highlighting rising demand around the world for sharia-compliant financial services.

“Malaysia is known for Islamic finance worldwide,” Rais Hussin said. “We have to take advantage and leverage on the huge branding that we have and [focus on leading] Islamic fintech,” he said, adding that other countries including Singapore are now going after Islamic fintech, realizing the massive untapped opportunities there.

Yet, according to the IMF, Islamic fintech is still in its infancy in Malaysia with just a handful of startups and a much less developed sector in comparison to countries such as Indonesia.

“I don’t think Malaysia has missed the boat,” Rais Hussin said. “I think with little tweaking here and there, we should be able to fast-track what it is that we need to do to actually accentuate and advance Islamic fintech.”

“We have universities, talent pools in Malaysia. Many of our talents are working in Dubai, in Bahrain,” he deplored. “We need to relook into the ecosystem. Make sure that [each element of] the ecosystem is complementing each other to be able to do what we need to do.”

The full video can be found here