Fintech Industry in Malaysia: Advantages & Growth

The pandemic has accelerated digitalisation globally, including Malaysia. With more companies looking to adopt new technologies to support and automate their business, the FinTech industry is certainly growing. Malaysia has seen many companies, local and foreign, setting up a company in this arena.

Anyone who is interested in making a FinTech investment in Malaysia will soon discover the many advantages possessed by the country’s burgeoning fintech industry. These include:

A stunning 60.3% of the people living in Malaysia are Muslim. Therefore, they require a form of fintech which is compatible with their religious beliefs. The large population of Muslims in Malaysia as well as other Southeast Asian nations has brought about the need for expansion and growth of fintech companies which are involved in Islamic finance.

Malaysia has taken advantage of this fact; today, many of Malaysia’s fintech companies have involved themselves in Islamic finances. The country has also hosted several Islamic start-ups from abroad as well as their initiatives.

Malaysia’s FinTech industry is one of the most developed in Southeast Asia.

The government has also offered funding to upcoming innovators in the country’s fintech industry. There are a few entities that specifically finance the FinTech industry:

This encourages potential innovators by setting aside necessary funds and creating a favorable business environment. These initiatives are some of the ways through which the government has powered the industry to grow rapidly within a short period of time.

The Fintech industry of Malaysia has also grown with regard to the demand of Fintech companies in the country. A 125% increase in mobile banking transactions were reported in 2020, with over 100% increase in E-remittance in 2020. This growth has allowed the fintech market of Malaysia to be able to challenge the markets of other countries and present itself as a major player in the regional fintech scene.

Developments and changes to the Digital Laws of Malaysia also serve as proof of the growth of fintech in Malaysia. In December 2020, the central bank released a licensing framework for digital banks.

The increasing prominence of fintech in the country has led to increased regulatory amendments in Malaysia to ensure that the government is able to monitor the fintech companies all over the country.

FinTech companies in Malaysia can also apply for the Malaysia Digital (MD) status. With the MD status, they are granted tax incentives and other benefits such as pre-approved headcount for foreign talents registered under the Malaysian entity.

FinTech developments have made online payments and transactions easier. The FinTech industry in Malaysia has also done much to contribute to the economic growth of Malaysia. One way in which it has done so is by increasing its total GDP.

The business operations of the various FinTech companies have allowed the industry to contribute significantly to the Malaysian government’s revenue through taxes. The taxes paid in turn have helped improve the delivery of the services offered by the country’s fintech companies. and the country’s budgeting.

The industry has also helped to create employment opportunities within the country. These opportunities created relieve much pressure on the economy, without the government’s intervention to create additional jobs to reduce unemployment rates.

The Malaysian Digital Economy Corporation Sdn Bhd (MDEC) has in the past mentioned the potential of Malaysia to become a digital hub for ASEAN because it is well-placed to increase its rate of digital growth relative to other Asian countries.

Ernst & Young’s ASEAN FinTech Census which was conducted in 2018 referred to Malaysia as an “emerging FinTech hub in Asia”. The increasing digitalisation of the economy of the country has made Malaysia’s FinTech industry prosper while also attracting investors who have been taking the country’s FinTech industry to new heights since 2016.

Therefore, Malaysia is a FinTech hub within the Southeast Asian region, ranking it ahead of every other Southeast Asian nation except for Singapore. Therefore, Malaysia is doing well as far as network readiness is concerned.

These facts coupled with support from the government, regulators, and industry players provide Malaysia with the opportunities and potential as an emerging fintech market which is rapidly becoming one of the most vibrant and robust in Southeast Asia.

The FinTech industry in Malaysia has been growing at an impressive rate. Many FinTech companies of Malaysia even offer services to customers in other countries. Most importantly, the industry contributed positively towards the growth of the country’s economy while also creating numerous employment opportunities.