Will Islamic fintech be Malaysia’s ticket out of ‘no man’s land’?

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Hello there,

Many years ago, while on an exchange program in the US, I took a course on Islamic finance.

While I admired the innovative structures used to avoid transactions with riba or interest, some of these seemed like a case of prioritizing form over substance to me.

Nevertheless, Islamic finance has been a burgeoning subset of the fintech sector in the last few years. With the recent emphasis on ESG concerns, Islamic finance, which is seen as socially responsible, can be expected to continue attracting investor interest.

It is also a niche where Malaysian startups have been able to shine, as my colleague Qishin notes in this week’s premium story.

Malaysia is often in a “no man’s land” when it comes to tech startup funding, caught between neighbors with much larger populations and tiny Singapore, which benefits from its affluent population and status as Southeast Asia’s financial hub.

Yet, Malaysia was ranked first in the Global Islamic Fintech Index for 2021 and 2022. This ranks countries by looking at 19 indicators over five categories.

Its high ranking could help the country become a hub for Islamic fintech players in the region or even globally.

Things are also looking up for Malaysia’s wider fintech landscape – wealthtech platform Versa, which wants to empower Malaysians to achieve financial wellness, made waves last week when it announced an eight-figure fundraise. I explore this further in this week’s Hot Take.

– Simon

THE BIG STORY

Can Malaysia find its niche as a Shariah fintech hub?

Image credit: Timmy Loen

As regional competition catches up, can Malaysia keep its lead in the Islamic fintech space, and can that lead be leveraged to make it a finance hub?

THE HOT TAKE

NEWS YOU SHOULD KNOW

FYI