FinTech is a gamechanger; it is the kind of revolution that is shaking up the financial services industry, blurring the lines between the financial services sector and the technology sector, and causing upheaval in an industry that is generally known to be stable and rather boring.
But interest in fintech has been driven largely by consumer demands for faster, cheaper, and more efficient finance and banking services, and fintech is now quickly becoming a significant part of a lot of people’ lives. Fintech, after all, not only makes current banking services efficient, but also provides a platform for these services to expand it’s reach to those who previously had no access to financial services. Not only that, fintech has also arrested the attention of investors. By the first half of 2016, 11 per cent of venture capital funding in SEA went to fintech.
What’s interesting to watch is how players of the industry deal with fintech. Do they consider fintech a threat or an opportunity? Where does fintech play into the current processes of the existing institutions? And since finance is so deeply rooted into both the daily lives of people and the larger entity that is the economy of a country, how are countries dealing with the financial revolution that fintech has brought to their shores?
Malaysia, in particular, is not only embracing this revolution but is looking to develop their fintech ecosystem. The presence of fintech in the country is rapidly growing; though sometimes eliciting nervous reactions from key finance players. With 82 per cent of Malaysian financial institutions seeing fintech as a threat to their business, it is also rather heartening to see that 47 per cent of all Malaysian financial institutions are not only ready to embrace fintech but have placed it at the center of their growth strategy.
Corporates support the development of the fintech ecosystem
Large corporations and financial institutions seem ready to embrace the disruption caused by fintech, as seen with the various programmes launched by these enterprises to help fintech startups develop.
One such enterprise is Maybank, who has involved itself into actively supporting the growth of fintech not only in the country but in the region. Having recently launched the Maybank Sandbox, the finance giant provides entrepreneurs and startups with the facility to get their fintech ideas out to be developed.
But beyond the sandbox is the Maybank Fintech Programme, an initiative that they launched 3 years ago that involves reaching out to startups and helping them incorporate fintech into their products and processes.
According to Amran Hassan, Head of Innovation for Maybank, one challenge that they see startups have in using and/or developing fintech is that unless its founders or someone in its management team comes from the banking industry, they are largely unaware of the regulatory and compliance issues that they need to consider or address.
Maybank seeks to close this gap by sharing and assisting startups in matters of regulation and compliance, as well as security, technology, finance, and banking matters. Maybank works with the Malaysia Digital Economy Corporation (MDEC), through the Malaysia Digital Hub. WIth it’s four spaces and various programmes for its startup community, the Malaysia Digital Hub provides Maybank with the platform to reach these startups for tech adoption, development opportunities, and mentorship.
Government regulators move to support the fintech development
Against the backdrop of a rapidly evolving fintech ecosystem, Bank Negara Malaysia, the country’s central bank, has established the Financial Technology Enabler Group (FTEG). FTEG’s purpose is to support innovations that will improve the quality, efficiency, and accessibility of financial service in the Malaysia, by formulating and enhancing regulatory policies to facilitate adoption of tech innovation in the financial service sector.
The FTEG has also launched a fintech regulatory sandbox, a live regulatory environment where fintech products can be deployed and tested within specified parameters and timeframes. The idea behind the sandbox is to ensure that FTEG can catch regulatory and compliance policies that may inhibit innovation in the financial service sector, by looking at how fintech startups operate and what using their products entail.
With this active government support, Malaysia’s fintech ecosystem is on the fast track for growth.
MDEC connects all relevant players
By the end of the third quarter of 2017, MDEC will be launching a Fintech Hub. The Malaysia Fintech Space is a public-private partnership that not only provides a co-working space, but also offers an accelerator programme and a startup academy for fintech startups.
MDEC banks on the success of the Malaysia Digital Hub and focusses on developing the fintech industry through the Fintech Hub, which they will launch in collaboration with Malaysian regulators and private financial institutions – bringing together all the relevant players to help develop the fintech ecosystem.
Disclosure: This article was produced by the e27 content marketing team, sponsored by Malaysia Digital Economy Corporation (MDEC)