KUALA LUMPUR (Nov 26): A well-implemented digital banking system will propel the economy and encourage further financial inclusiveness, according to a discussion at the World Islamic Economic Forum (WIEF) Foundation’s latest Powertalk webinar.

The webinar Thursday (Nov 25) titled “Digital Banking: Driving Financial Inclusion for Micro, Small and Medium Enterprises (MSMEs)”, featured Monash University head of school of business Professor Dr Nafis Alam, KPMG Malaysia head of financial risk management and fintech/digital banking leader Yeoh Xin Yi and ShopeePay Malaysia head Alain Yee.

They discussed the constraints faced by MSMEs and the role of digital banking in overcoming these challenges.

Yeoh said digital banks have the potential to fill the void that is within the economic environment especially if the recipient of the licence already has an existing pool of clients, consisting of MSMEs, within a digital ecosystem.

“The digital bank can leverage existing data and build advanced analytics to understand the profiles of specific segments, thereby understanding the MSMEs’ needs better.

“Digital banks may also extend solutions beyond pure financial services, as MSMEs often require more than just financial support, to grow,” she said.

Dr Nafis said digital banking brings with it the prospect of extending financial services and facilities to these underserved groups such as MSMEs.

“It is not here to replace conventional financial institutions but to complement them,” he said.

Meanwhile, local MSMEs are able to pivot their businesses online by merging valuable insights and data.

“Now, with the ecosystem that they are in, they can create an improved and sustainable livelihood for themselves and those around them as they scale with access to fintech solutions,” said Yee.

The panel pointed out that many e-commerce platforms also provide e-wallets as extensions, which further precipitate financial inclusion.

They said this is an early indication that financial inclusion can indeed be achieved through the digital economy, with innovations such as e-commerce platforms, e-wallets and strengthening of logistics infrastructure.

Meanwhile, Yeoh shared the findings from KPMG Malaysia's report “Digital Banking Malaysia: The Inclusive Agenda”, and said that the unserved and underserved categories from the B40 groups should be onboarded to financial service platforms that can help with their cash flow management, enable micro-savings or deposits, offer micro-insurance to safeguard their basic needs as well as offer basic financial products to tide them over their financial troubles.