The Islamic financial landscape in Malaysia has seen much advancement in recent years with digital technology at the core of such developments.

Like conventional banking, Islamic finance has evolved to include innovative online banking platforms which provide customers with fast and easy access to banking products, services and information.

Needless to say, competition among Islamic lenders has also increased in tandem, and banks now find themselves having to constantly innovate to cater to increasingly discerning customers.

Compared to conventional banks, Islamic banks have the added task of ensuring that the technology they implement is in line with the Islamic principles that their banks operate within.

That said, the global Islamic finance industry is set to continue to grow and reach a whopping US$6,67 trillion in value by 2027, according to a report by the London Stock Exchange Group.

This will primarily be driven by the increasing demand for Shariah-compliant financial services and transactions.

Back home, Prime Minister Datuk Seri Anwar Ibrahim in May pledged RM100 million to encourage innovation and new financial solutions to advance the Islamic finance sector, suggesting the industry will play an increasingly pivotal role in the local economy.

Bank Rakyat’s digital transformation journey

Firdaus Faudzi, Chief Strategy and Transformation Officer at Bank Rakyat shares that as Malaysia’s largest Islamic cooperative bank, they have been instrumental in propelling the country’s Islamic digital banking landscape forward.

In an interview with Fintech News Malaysia, Firdaus said Bank Rakyat has developed iRakyat, an online and mobile banking platform. Firdaus said the bank has embarked on what he calls a comprehensive digital transformation journey to deliver more customer-centric services while upholding Shariah principles.

“Offering a wide range of Shariah-compliant services, iRakyat provides customers with convenient banking solutions,”

he said, adding that over one million individuals have so far benefited from this platform.

While iRakyat prioritises simplified navigation, clear instructions, and accessibility for all users, Firdaus noted that the platform is an “ongoing journey” where the bank actively gauges its customers’ needs.

“We will continuously improvise and evolve iRakyat to satisfy the current and future personas of our customers.”

As part of its focus on customer needs, the bank had also in 2021, introduced the Bank Rakyat Quick (BRICK) platform which Firdaus said facilitates swift and easy access to Shariah-compliant retail banking products.

So far, about 150,000 applications have been received via BRICK. Another method Bank Rakyat uses to enhance customer experience comes from the bank’s adoption of a paperless approach for onboarding accounts.

This, Firdaus said, is to enhance efficiency, reduce environmental impact, and improve overall customer experience.

He also said this commitment to sustainability in reducing environmental impact aligns with the bank’s customer-centric philosophy.

“As a full-fledged Shariah-compliant bank, Bank Rakyat prioritises adherence to Islamic principles in all its operations,” he added.

Demonstrating this commitment is a dedicated Shariah Advisory Council that the bank has put in place to ensure all digital products and services align with Islamic laws and guidelines.

Using technology to help the less fortunate

Bank Rakyat also plays a role in being a socially responsible corporate citizen. Via innovative social finance initiatives, namely, its RAKYATpreneur programme, the bank helps high- potential asnaf entrepreneurs expand their businesses.

“Seed funding for RAKYATpreneur participants is credited directly into their Bank Rakyat Saving-I Account.

“Leveraging on our technological platform, participants are encouraged to use the Bank Rakyat cashless payment platform to conduct their business transactions,” said Firdaus.

The lender also has a programme called UNIpreneur where it works with local higher education institutions to assist underprivileged student entrepreneurs from selected Universities.

According to Firdaus, over the last three years, both initiatives have helped 1,833 asnaf entrepreneurs and students, with total funding reaching RM6.63 million.

Meanwhile, the bank is also helping to empower micro and informal entrepreneurs via another initiative called Jajahan Rakyat.

This has been implemented in Johor and has led to the onboarding of CASAIA accounts for Johor Peniaga Bazar Karat, facilitating cashless transactions through i-MerchantRAKYAT, a cashless QR payment method for entrepreneurs of micro, small and medium enterprises and cooperatives.

Yet another programme, Digital Desa Program has also been introduced to further drive financial inclusion in underserved areas.

Via this programme, the onboarding of more than 100 micro-entrepreneurs unto the Electronic Current Account-i and Savings-i Accounts, has been enabled.

By promoting cashless lifestyles and enhancing access to the bank’s digital products, the lender strives to uplift underserved communities, Firdaus said.

He reiterates that Bank Rakyat remains committed to making Shariah-compliant financial services and products accessible to all, particularly the underserved segments of the population.

“Digital transformation is seen as a crucial tool in achieving this goal by breaking down barriers to financial inclusion.”

He notes Islamic banks are increasingly prioritising customer personas, looking beyond financial solutions.

By leveraging on advanced digital platforms and data analytics, the lenders are creating seamless customer journeys from onboarding to after-sales service, he noted.

This article is a part of the Digital Islamic Banker series, produced by Fintech News Malaysia in collaboration with Backbase.