Malaysia’s Fintech Landscape

Malaysia’s fintech scene continues to thrive with number of fintech firms steadily growing. In 2023, Malaysia’s first digital bank was launched. Digital insurance and takaful operator framework was also introduced. The utilisation of Artificial Intelligence (AI) technology significantly accelerated fintech innovation. Below are highlights from the Malaysia Fintech Report 2023:

Malaysia’s fintech companies at a glance

Banking landscape

In 2022, e-payment transactions grew by 31.5% to 9.5 billion from 7.2 billion in 2021. Averaged across the whole country, each Malaysian could have made 291 e-payment transactions in 2022, indicating cashless payment methods are gaining traction over cash-based.

For instance the annual growth rate of cash withdrawals from ATMs, typically used as a  proxy for the level of cash usage, grew moderately to 798.5 million transactions valued at RM404.7 billion (from 779.6 million transactions valued at RM386.3 billion in 2021), but remained below its pre-pandemic levels. Use of cheques continued to decline to 46.1 million in 2022 from 48.3 million the previous year. In the aftermath of COVID-19, over two-thirds (68.9%) of total credit and debit card-based transactions are now contactless, while various

industry-led initiatives to actively promote adoption of QR code payments as a cost-effective and convenient payment method have led to a higher number of merchants, particularly MSMEs, accepting DuitNow QR.

With growing innovation in the card space, cardholders can now also authenticate, a speedier alternative to entering the customers’ Personal Identification Number (PIN) on a payment terminal while still ensuring appropriate safeguards are in place that align with Bank Negara Malaysia prudential requirements.

And with increased collaborations between e-money issuers (EMIs) and other financial service providers, customers can now access more financial products on e-wallet applications or platforms such as remittance, micro-insurance, micro-financing and micro investments.

The key to all this is not just willingness and ease of payment but data integrity and cybersecurity. If for any reason the latter is compromised, all this hype of online banking/payments will disappear.

Reference:

Malaysia’s Fintech Report 2023, Fintech Malaysia/Trang