In an era where technology is challenging and reshaping the contours of Syariah-compliant industries as well as the sectors financing them, Hong Leong Islamic Bank has been on what could turn out to be a pivotal journey of digital transformation.
On this path, Hong Leong Islamic Bank has been guided in recent months by Dafinah Ahmed Hilmi, its Chief Executive Officer since mid-2023.
According to the CEO, the bank’s foray into digitalisation is not merely about adopting new technologies; at its core, it’s a concerted effort to align with the evolving demands of customers, promote financial inclusion, and provide end-to-end solutions for customers in relevant industries.
Under the leadership of Dafinah, the bank has continued on a journey to leverage technology and strategic partnerships to better serve its customers and communities.
Fintech News Malaysia delves into the bank’s digital initiatives, its tailored strategies for individual and SME customers, the insights gathered from Dafinah’s experience in Islamic banking, and a broader perspective on the future direction of digital transformation in Islamic finance.
Hong Leong Islamic Bank Supports SMEs in the Halal Ecosystem
Since March 2024, the centre of Hong Leong Islamic Bank’s digitalisation narrative for SMEs has been the BizHalal programme, a forward-looking endeavour designed to bolster small and medium enterprises (SMEs) operating within Malaysia’s burgeoning halal ecosystem.
The BizHalal program, in collaboration with the Halal Development Corporation (HDC), offers Shariah-compliant financing complemented by halal advisory support from HDC and in-house halal industry specialists at Hong Leong Islamic Bank, to be offered synergistically within the broader ecosystem of parent Hong Leong Bank Berhad’s suite of banking services.
Obtaining halal certification for small businesses in Malaysia involves navigating intricate regulatory requirements, rigorous documentation, and compliance with stringent food safety and religious standards.
Dafinah explained the rationale behind BizHalal, and how it is intended to support government agency HDC’s directive to financially include halal-oriented small businesses:
“We need to play a part in terms of working within the ecosystem, taking into consideration the potential growth in the Halal industry and aligning with the government’s dedicated emphasis on growing the Halal ecosystem in Malaysia.
Where the banks come in, particularly with BizHalal, is that we have our own in-house specialists to advise clients on their journey of becoming halal certified, even before they come for financing.”
This value-added advisory service helps businesses navigate the challenges and costs associated with obtaining halal certification. Hong Leong Islamic Bank’s ultimate goal is to support these SMEs in becoming exporters and moving up the value chain, not just within Malaysia but also on a global scale.
By equipping SMEs with the necessary knowledge, resources, and financial support, Hong Leong Islamic Bank is paving the way for these businesses to expand their reach and tap into new markets.
As Dafinah notes, “Our collaboration[…] is to drive halal development, which is part of our growth strategy,” highlighting the strategic intent in nurturing individual and business growth beyond conventional banking services.
Digitalising Schools and Promoting Financial Literacy
Hong Leong Islamic Bank’s digital transformation strategy extends beyond serving businesses to promoting financial literacy among the younger generation. The bank has introduced the “HLB@School” programme to enable cashless transactions within schools, such as in canteens and school co-op stores, using debit cards.
“By enabling this tool, payments can be done using a debit card, allowing parents to monitor what their kids spend on. This is aligned with our 3-in-1 Junior Savings Account as well,”
Dafinah says.
The 3-in-1 Junior Savings Account, designed specifically for young savers, serves as a complementary offering to the HLB@School program. It encourages children to develop a saving habit while empowering parents to track and guide their children’s spending patterns, with supervision enabled conveniently via their mobile devices.
The bank has also partnered with Smart Reader Kids, one of Malaysia’s largest kindergarten chains, to teach children about money management through engaging visual content.
For primary and secondary school students, Hong Leong Islamic Bank volunteers conduct financial literacy modules covering topics like responsible spending and avoiding scams.
“We feel that it is our duty to really start that whole financial literacy journey, getting them comfortable with handling digital tools, because that is where we are today,”
Dafinah emphasises, reflecting her belief that digitalisation is paramount for banks to engage with customers’ (of all age groups) demand for personalised, data-driven financial services.
“Digital is at the core of what we do[…] It’s really about going back to the customers, what they want,”
she asserts.
Engendering Social Finance with Partnerships
As seen with the Smart Reader Kids collaboration, Hong Leong Islamic Bank’s digital transformation journey is not a solo effort; the bank has forged strategic partnerships to accelerate innovation and expand its offerings.
But in keeping with the spirit of Islamic financing, these partnerships can also take the form of social finance: leveraging fintech social enterprises to provide private capital that help businesses address pressing social needs as well as financial inclusion.
One such pair of partnerships is led by Hong Leong Islamic Bank under the umbrella of the Hong Leong Bank Berhad initiative, ‘HLB Jumpstart – Micro Business’. This programme provides funds to individuals lacking opportunities for full-time employment, and supports them with opportunities to start their own sustainable businesses.
Through HLB Jumpstart – Micro Business, Hong Leong Islamic Bank will allocate funds via two partners, MADCash and AlfieTech. This will include zero-profit financing, capital opportunities, business management mentorship, and training.
The main aim is to assist underserved micro-entrepreneurs, such as gig workers, homemakers, and thin-file individuals in achieving sustainable incomes. Eacn fintech partner will make available two seed funding types.
MADCash offers participants RM4,000 each, repayable over 12 months at zero profit. They will also receive mentorship to develop profitable, enduring businesses.
Conversely, AlfieTech provides up to RM1,500 per applicant in e-commerce credits for use to build their own dropshipping virtual storefronts on AlfieTech’s proprietary platform. Dafinah says that MADCash and AlfieTech are both committed to promoting financial inclusion within underprivileged communities.
MADCash supports women micro-entrepreneurs through Shariah-compliant funding and aims to enhance their financial and credit profiles. AlfieTech meanwhile is an alternative data intelligence firm, extending digital micro-financing to these groups.
These partnerships demonstrate the bank’s proactive approach to embracing disruptive alternative financing and collaborating with industry leaders to drive innovation governed by Islamic ethical principles.
Steering Hong Leong Islamic Bank for the Future
Despite having spent less than a year in her current post at the helm of Hong Leong Islamic Bank, Dafinah’s leadership journey within Islamic banking is characterised by a commitment to merging Islamic banking principles with the exigencies of the modern digital world.
With her 23 years of conventional and Islamic banking experience, her vision for Hong Leong Islamic Bank underscores the importance of digital technology in enhancing service delivery while adhering to Islamic banking principles.
Since joining the bank, Dafinah has been impressed by the organisation’s commitment to innovation and Syariah-compliant customer-centricity. She cites some of the milestones Hong Leong Islamic Bank has achieved, some even before her tenure as CEO, showcasing the evolving journey of Hong Leong Islamic Bank as it adapts to the needs of the communities it serves.
Under Dafinah’s stewardship, the CEO says Hong Leong Islamic Bank is looking to redefine the Islamic banking experience for those perhaps unfamiliar that Hong Leong Bank Berhad has an Islamic banking division.
Dafinah believes that digital transformation will play a pivotal role in transforming that mindset — and not just for individuals and merchants that could be prospective customers, but for trade partners in the halal business supply chain that grew to be worth US$3 trillion in 2020, according to HDC analyses.
Through initiatives like BizHalal, HLB@School, and strategic partnerships with the likes of MADCash and AlfieTech, Hong Leong Islamic Bank is planting its flag for modern, Syariah-compliant banking in Malaysia, and beyond.
This article is a part of the Digital Islamic Banker series in collaboration with Backbase.
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