Malaysia is the latest country to hop on the fintech trend

A Southeast Asian country is set to become one of the top fintech countries, showing impressive rates of adoption and the willingness to work for progress. Malaysia which is typically known for its beaches and rainforests isn’t very active on the tech market, or so we thought till very recently. Malaysia has managed to create a thriving fintech scene, which is mostly a result of the lack of the proper financial service provided by the banks and the government, a sentiment that is very common among the Asian and African countries currently taking the fintech world by storm.

The untapped potential

Fintech is one industry where unlikely countries really do prevail over the well-developed ones, which already have sufficient enough financial systems where the need for innovation is not that urgent and Malaysia is just another proof of that theory. 

The most popular services currently booming in Malaysia are digital payments and mobile wallets, with many local fintech enthusiasts, working hard to expand their own portfolio and create unique products for local consumption. 

Malaysia is definitely not an economy to be jealous of and the annual growth has averaged under 5% for over the past five years. But the fintech adoption in the country and the interest from the local government to pursue this profitable industry might change the game for Malaysia. The divide between the rich and the poor has always been the problem in the country but over the last few years, the growing middle class has been responsible for creating more demand for technologies like e-wallets and frictionless payments. The country where the mobile phone penetration rates have just begun to reach a higher level, the government has been pushing for the fintech industry to grow and develop fast enough so that the new generation of mobile users can get access to fintech and start using it on an everyday basis. 

The industry of the future

The Malaysian government is banking on fintech to take the country to a new economic level and according to industry professionals, there is definitely great potential there. 

This trend won’t just stop at providing eWallets though. The country has big plans to delve into insurtech, crowdfunding and many other practices widely used in countries with the highest fintech adoption and innovation rates. 

This trend falls right in line with the increased access to mobile phones and the growing popularity of mobile banks. The usage rate for phones just hit over 90% in 2018 and the trend has only grown ever since. While access to mobile phones is still not universal, the coverage is and everyone who does have a mobile phone has access to 4G. 

Surprisingly so, Malaysia ranked quite high on the Network Readiness Index, positioning itself higher than Italy and China, and topping every country off from its neighboring region. 

This has already taken its toll on the banking industry, with many branches of the most popular banks in the country closing down due to lack of demand. The number of automated teller machines has also been slowly decreasing too, giving more opportunities to the fintech industry to continue its nationwide takeover.  While services like loans and raising capital still remain within the monopoly of the local banks, digital payments, insurance, and crowdfunding are now all dominated by fintech.

The lack of resources

Right now the number of local startups amounts to 200 and the growth is probably to be expected but the main challenge that fintechs face in Malaysia, among the concerns around the safety which are quite universal, is the lack of talent. The human resources are something that the Malaysian fintech startup scene definitely lacks and while the industry is very prestigious worldwide, it seems like the local population of young entrepreneurs and developers will need an extra push to start investing in Malaysia’s startup scene. Specifically, positions of data analytics, machine learning, and regulatory bodies are often left empty. 

But since the government is so involved in this project and wants to see Malaysia as a local fintech leader, there are some policies and initiatives in place, aimed at encouraging the young talent to put their time and effort into these campaigns and projects to help boost the existing startup scene.

The fintech revolution is reaching its peak in many countries near Malaysia so it’s not surprising that there is a lot of desire from the authorities to catch up. So the potential and the already existing user base for fintech is a great place to start.