Where does Malaysia stand in Southeast Asia fintech?

Years ago, anything related to banking technology and fintech were highly esoteric. Discuss the subject to anyone outside of the industry and you’ll be met with blank stares. However that is not a situation nowadays. Financial Technology or also called as fintech has become the most interest topic and this is driven largely due to high demands from consumers for cheaper, faster and more efficient banking services. Based on Google trend, it show that the increase in interest year by year tells a very poignant story on how fintech is quickly becoming a big part of many people’s.

From the assistant governor at the Bank Negara Malaysia Marzunisham Omar explained that the growth of the fintech has provided innovative opportunities within the financial industry. Reported by The Edge Markets, digital consumers in Asia will rise from the current 70 million to around 1.7 billion by 2020. Thus, next we will explore the fintech within the context of  Malaysia from the perspective of regulators, banks and fintech companies.

In April 2016, Dato’ Muhammad Bin Ibrahim has become the successor of Tan Sri Zeti Akhtar Aziz has been extremely vocal and proactive in the world of fintech. From his maiden speech, he said “Fintech is challenging the status quo of the financial industry. New business models will emerge. Delivery channels will challenge existing norms. Transaction costs will be reduced. Rather than looking at the fintech revolution as unwelcoming, financial institutions ought to embrace it as an opportunity”. He also mentioned that 10% to 40% of overall banking revenues could be at risk by 2025 due to financial technologies or fintech innovations. Hence, recognized of the potential and risks of the fintech, a regulatory framework for fintech will be ready by July 2016 which announced by Dato’ Muhammad Bin Ibrahim the Governor.

Financial Technology Enabler Group (FTEG) is established by the Bank Negara Malaysia in June 2016 act as the focal contact point on fintech related queries, which include matters related to regulation and the adoption of fintech. Since Dato’ Muhammad Bin Ibrahim become the Governor, Bank Negara Malaysia has been a lot more progressive when it comes to matter related to fintech.

In response by the speech of the Governor Bank Negara Malaysia saying that 10% to 40% banking revenue could be at risk by 2025, banks take an action to overcome this situation. Maybank the largest bank in Malaysia servicing over 22 million customers  which is the first few banks embracing fintech. From the past Maybank has always been quick to adopt new technology as prove by the fact Maybank was one of the first to implement online Banking. Maybank sees Maybank Fintech as a tremendous opportunity for themselves to harness the startups ecosystem regionally, to acquire the best innovation ideas in financial technology.

Latest activities by Maybank related to Fintech with the key criteria of “Go-to-market” partnership which is their annual Maybank Fintech programme  where both parties can leverage on each other to tap into an opportunity. Furthermore, Maybank has also launched their Maybank Fintech Sandbox last year that will provide opportunities for start-ups and innovators to develop and test new ideas. The sandbox will also provide fintech companies with the environment, tools, simulated data and Application Programming Interface (API) to experiment around. For payment capabality, Maybank has also launched a digital wallet called MaybankPay and their recent soft launch for Maybank QRPay.

We can see that all regulators, banks and fintech companies work together to handle the fintech in Malaysia in same path or another and several promising players in the local fintech startup scene. As we speak, more and more fintech startups are emerging locally, therefore can Malaysia rise to be a gateway for fintech in Southeast Asia based on the three perspectives?