Islamic Finance can work with Fintech to promote Financial Inclusion in Malaysia

The adoption of Islamic finance through fintech has a large opportunity to connect with the masses, especially rural population. Islamic finance has recently gained popularity in the Southeast Asian market due to its advantages. Apart from being a promising instrument to build wealth, it is also being touted for its ability to ensure justice in society and promote financial inclusion.

But how can Islamic finance reach out to a wider audience, especially those living in rural areas in Malaysia, where its advantages are badly needed?
 
This is where the sector can tap into fintech to further widen its reach. As explained in the Malaysia Fintech Report 2019, the adoption of Islamic finance through fintech has a large opportunity to connect with the masses, especially rural populations who have less access to financial products and services. “But in order to do this, Islamic finance must forge its own path with fintech, as it cannot replicate conventional financial instruments or products and expect adoption,” the report stated.It also stressed that Islamic finance must utilize tech to meaningfully provide bespoke financial products suited to the needs of customers and microenterprises in rural areas, as the rural population still represents the largest underserved customer base. Beyond serving the under banked communities, Shariah-Compliant fintech products also have the potential to launch its products and services in the global market. This is especially true as the government, through Malaysian Digital Economy Corporation (MDEC), already has a framework in place, Islamic Digital Economy (IDE). The framework is meant to assist Islamic digital players to scale and find demand for their products/ services.