Kuala Lumpur (6th October 2022): Islamic finance players keen on tapping into the fintech sector need to consider investment challenges, lack of awareness and regulatory considerations, said experts at Day 2 of the Global Islamic Finance Forum 2022.
Daeng Saifullah Termizi, Co-founder and Chief Operating Officer of Kestrl said one of the hindrances to users downloading or accessing Islamic banking savings or investment apps was not due to lack of funds, but rather the lack of interest.
“Investment is easy, but level of percentage (of customers) to start an investment is low. We question why this is happening, because the barriers to entry were not dollar and cents, it’s the mindset, people have to have an investment mindset to be able to download the app and take the next step,” he said.
Umar Munshi, Co-founder and Group Managing Director of Ethis Global Group told the audience that leaders or founders of Islamic finance startups or fintech applications must set the example, to help alter perception of the viability of Islamic fintech apps or companies.
“If participants (or customers of fintech apps) come from the market movers, finance leaders and industry players themselves, it can set a trend to get more peers or friends to participate,” he said.
Shahid Amin, Chief Executive Officer of Rizq offered context in a non-Muslim market of the United Kingdom. In a country where Muslims make up roughly six million people of the total population, they are a minority, posing a challenge in convincing long-term investors.
“Often investors are demanding interest (profitability in conventional banking) within one year, and that is difficult for new player who wants to get into the Islamic Finance or fintech space,” he said.
Shahid said having large institutions or well-known brands to support this space boosts the credibility of new fintech applications.
He added that regulatory engagement was also key to pull in more Islamic Finance fintech players in the space, particularly the takaful sector.
To that Umar noted that the investment climate in Malaysia has improved in the last three to four years, as investors are now “getting excited” with ideas and new fintech companies in the Islamic finance space.
Nadir Ali, Chief Strategy Officer of neoleap noted that in the Middle East, Islamic finance fintech companies are booming, and in Malaysia, the scene was in good shape and on the right track.
“From a global paradigm, we (Malaysia) are young, and a lot more needs to be done. There are gaps to bridge, by either creating awareness or diversifying your (Islamic fintechs) portfolios,” he added.
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The Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) was established in 1995. Currently, AIBIM has 28 member banks and the association:
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