KUALA LUMPUR (May 3): Malaysia's banking industry has been urged to embrace challenges put forward by financial technology (fintech) companies to stay relevant in the evolving world economy.
"With fintech, people don't go to the banks anymore and banks have taken on intermediation roles... (hence) banks have to work together with fintech to see what they can contribute to the financial market," said Global Islamic Finance Forum 2016 organising chairman Nazlee Khalifah today.
Citing China as an example, Nazlee said fintech companies there can raise funds via crowdfunding, which do not require a banking license. This will take away some potential banking customers.
"But instead of seeing fintech companies as competitors, we might as well see how we can work together (with them) and strengthen our proposition to customers," he added.
According to him, some banking groups are already looking at how to collaborate with fintech companies.
"The banking industry is a very highly regulated industry. They have to embrace technology to ensure banking is easier for customers. Ultimately, what customers want is fast, efficient and reliable (service)," he told pressmen, after launching the Global Islamic Finance Forum 2016 (GIFF 5.0) here.
Also present at the press conference was Bank Rakyat managing director Datuk Mustafha Abdul Razak, Maybank Islamic Bhd CEO Datuk Muzaffar Hisham, CIMB Islamic Bank Bhd CEO Rafe Haneef, and Association of Islamic Banking Institutions Malaysia (AIBIM) executive director Yusry Yusoff.
GIFF 5.0 is organised by AIBIM, supported by Bank Negara Malaysia (BNM) and the Securities Commission of Malaysia (SC). The three-day event will be held at Sasana Kijang, Kuala Lumpur from May 10 to May 12.
The organiser hopes to gather thought leaders, experts from major institutions, as well as fintech innovators at the event to share insights, explore new business models and opportunities to achieve the vision of having a major presence in the mainstream market.
Nazlee said the forum aims to spark discussions and ideas around new business models, new strategies, fintech, enhancing competitiveness and expanding the reach of Islamic finance.
"Aside from fintech, new frontiers like blockchain are opening up, and the industry needs to be able to partner with innovators and adopt new ideas in order to thrive," he added.
Other highlights of the event, Nazlee said, include AmFunds Management Sdn Bhd's pitch of its soon-to-be-launched US$50 million iGEMS Fund launch, the world's first Shariah-compliant US-dollar-based Smart Beta Global Developed Market Equity Fund.
Nazlee, who is Affin Islamic Bank CEO, said BIMB Investment Management Bhd is also pitching its RM60 million BIMB Arabesque i Global Dividend Fund, which was launched last year, at the event.
Global Islamic financial assets totaled US$1.81 trillion in 2014, according to a recent report published by the Thomson Reuters Foundation. That figure is expected to reach US$3.25 trillion by 2020.
Islamic commercial banking figures, meanwhile, totaled US$1.3 trillion in 2014 and are set to make up about 9.9% of the global market in 2020 at US$2.6 trillion, the same report found.
Malaysia has the best-developed economy for Islamic finance in the world, followed by Bahrain, the United Arab Emirates, Saudi Arabia and Oman. As at end of Dec 31, 2015, Malaysia's Islamic assets under management totalled US$17.8 billion, accounting for 31% share of the total global AUM.