There are several opportunities for Islamic fintech companies in Southeast Asia, including providing Shariah-compliant solutions for payments, lending, and investments.
The Islamic fintech industry has a higher growth projection at 21% CAGR by 2025 than conventional fintechs at 15% CAGR. The market is projected to reach RM603.65 billion (US$128 billion) by 2025.
Islamic fintech companies are providing a much-needed alternative to traditional banking products and services that are not compliant with Shariah law.
In addition, they are also tapping into the region’s growing demand for digital banking and financial services.
Indonesia, Malaysia, and Singapore are well-positioned to become significant players in the industry, thanks to a combination of strong economic growth, large Muslim populations, and supportive government policies.
The region is already home to many successful Islamic fintech startups, such as Indonesian Ethis and Alami, which use technology to develop innovative solutions that comply with Islamic law.
These include peer-to-peer lending, Islamic crowdfunding, and Shariah-compliant online payment providers.
These startups are vital in promoting financial inclusion and providing Muslim consumers access to Shariah-compliant financial products and services.
Malaysia has recently granted two Islamic digital bank licenses, one of which has been awarded to a consortium of AEON Financial Service Co., Ltd., AEON Credit Service (M) Berhad and MoneyLion Inc.; and a consortium led by KAF Investment Bank Sdn. Bhd.
Al Rajhi Bank, one of the largest Islamic banks in the world, has also set up a new digital bank in Malaysia. This is in line with the bank’s goal to be a leading digital Islamic bank globally. The new bank will offer a suite of digital products and services that are designed to meet the needs of the modern customer.
The contribution of Islamic finance to the Malaysian economy is expected to grow in the coming years. This is due to the increasing demand for Shariah-compliant products and services globally, as well as the continued efforts of the government to promote the growth of the Islamic finance sector.
With the proper support, the Islamic fintech industry in Malaysia has the potential to thrive. If the country can develop a world-class Islamic fintech industry, it will be well-positioned to become a global leader in the field.