null Malaysia's fintech industry slow to capitalize on Islamic finance growth
Malaysia's fintech industry slow to capitalize on Islamic finance growth
28 Jun 2022 | Tuesday Source: S&P Global
Malaysia's Islamic financial technology companies are making slow progress in a booming Islamic finance market, amid competition from large local banks and a lack of funding and product offerings.
The Southeast Asian nation's nascent Islamic fintech sector was estimated to have generated about $3 billion in transaction volumes in 2021. That is a very small piece of the local Islamic finance industry, which reported assets of over $272 billion at end-2021, according to central bank data.
Islamic finance assets also represent 35.5% of total banking assets in Malaysia.
"Malaysian fintech companies typically serve niche, underserved markets such as [small and medium-sized enterprises], microfinance institutions and B40 [the bottom 40% of income earners] that do not have good access to banking products and services," said Nikita Anand, associate director at S&P Global Ratings. "As such, their target market segment is relatively small compared with that of Islamic banks in Malaysia."