SC: Fintech to be innovative solution enabler in Malaysian Islamic capital market

Financial technology (fintech) will be leveraged as an enabler for innovative solutions focusing on the halal economy, socially responsible investing (SRI) and Islamic social finance to further grow the Malaysian Islamic capital market (ICM), says the Securities Commission Malaysia (SC).

SC Islamic capital market development executive director Sharifatul Hanizah Said Ali said the regulator also expects greater adoption of digitisation and technology to broaden and accelerate the capacity for stakeholders to enhance the Islamic finance ecosystem.

“The digital solutions would facilitate connectivity by allowing issuers, investors, and intermediaries to access existing and new markets in a more efficient and costeffective manner, thereby accelerating the industry’s growth,” she told Bernama via an email interview recently.

Sharifatul Hanizah said post Covid-19, the small and medium enterprise (SME) industry had acknowledged the importance of going digital and utilising fintech to ensure continuous operationalisation of their business activities, as well as to gain access for capital to maintain and expand their business.

“Raising capital through syariahcompliant means is especially essential for SME in the halal industry, which comprises a large percentage of SME in Malaysia,” she said.

As for the bottom 40% of the household income group (B40), the youth and underprivileged, Sharifatul Hanizah said the adoption of fintech and Islamic fintech had provided them with new ways to generate income after being displaced from their job, or to regain some financial control with easier and more effective money management with increased financial literacy.

Noting the importance of fintech in serving the B40 and SME, she said the SC is focusing on expanding ICM offerings to enable greater connectivity, accessibility and inclusivity for all market players, particularly the underprivileged segments.

“To achieve this, the SC will increase its efforts on the development of the Islamic social finance sector which has been instrumental in addressing poverty alleviation and socio-economic development,” she said.

She said today, additional sources of funding for Islamic social finance are enabled by capital market instruments such as SRI sukuk and waqf-featured funds.

On the third Capital Market Masterplan (CMP3) for 2021-2025 launched in September 2021, Sharifatul Hanizah said innovation and fintech are among the key areas outlined in the five-year plan.

“To enable further growth and expand ICM offerings, fintech will be leveraged as an enabler for innovative solutions.

“Awareness and active participation from both the demand and supply side of the market are also crucial to ensure the growth and expansion of the ICM through fintech and digital channels,” she said. – Bernama