Financial technology or fintech as it is more commonly called, is catching up rapidly in Malaysia. It is fast taking up the central stage in the development of the country’s digital economy.
With a government that strongly supports digital transformation and an increasing number of mobile users, Malaysia is well suited to reap the advantages of the fintech revolution. So, how far has Malaysian businesses progressed in embracing this technology?
According to a new regional survey conducted by CPA Australia, a global professional accounting organisation, around 75% of Malaysian businesses have incorporated at least one fintech service or product in the last 12 months. The most widely embraced is mobile payments and digital wallets, followed by open banking APIs and chatbots or Robo-advisories.
The survey also showed that most of the businesses that adopted fintech recently saw it as a crucial addition to their company moving forward, while some only accepted it as a solution to challenges posed by the COVID-19.
Very few businesses saw it as a means of reducing cost and some even mentioned that they do not intend to include fintech into their business within the next 12 months.
So, what is making these businesses turn their backs on this product or service that might be beneficial for their companies? After all, consumer behaviour is changing where more and more people are moving towards mobile payments and digital wallets, seeing how they offer better customer experience.
The two biggest reasons are, firstly, lack of understanding of fintech products and services among businesses. As Bryan Chung, chairman of the Digital Transformation Committee at CPA Australia Malaysia Division points out, “Small businesses may not have a sound understanding of the benefits of fintech to their organisations. More needs to be done to improve small business understanding of what fintech solutions might be good for their businesses.”
Secondly, the greater concern is cybersecurity and data threat. Businesses need to ensure that proper tools are implemented to protect sensitive data before they can completely trust fintech services and products. Fintech needs to address this before they can expect widespread adoption.
It is noteworthy that Malaysia has always made cybersecurity a top priority, fully understanding the repercussions of a cyberattack on consumer confidence on fintech services. Malaysian regulators as well as banks have security solutions in place to ensure that the fintech services and products such as digital wallets are safe to use.
Indeed, there are risks involved but shouldn’t businesses consider whether the benefits outweigh the risks?
An additional challenge to the future of fintech in Malaysia is a shortage of talent in this area. But Malaysia seems to be prepared to meet all challenges related to digitally transforming the country head-on, including encouraging new talents in the field of fintech. And, businesses themselves can work on closing the gap in the talent pool too, by training their existing employees.
In just the last decade, internet usage in Malaysia has quadrupled. Owing to high mobile phone penetration rate and supported by the affordable 4G network, phone banking and use of digital wallets have increased too. 5G network is also aggressively being experimented within the country. In fact, Malaysia ranked high in the 2019 World Economic Forum’s Network Readiness Index among 139 countries.
Hence, it can be expected that Malaysia will see a complete digital transformation towards all businesses using fintech in the near future.
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Srimayee has over 10 years of experience in creating content. Driven by her passion for writing, She has had her articles published with a byline in newspapers, magazines, blogs, and websites. Her other passions include reading, gardening and traveling.
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