Distinguished guests and speakers, |
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| 1. | Today marks another chapter in the Malaysian capital market’s digital journey towards establishing an innovative ecosystem for financial technologies to prosper. |
| 2. | Fintech has the ability to fulfil the SC’s digital agenda to enhance access to financing, increase investor participation, augment the institutional market and develop synergistic ecosystems. |
| 3. | This year, we want to focus on encouraging greater fintech growth, especially for the Islamic Capital Market (ICM). |
| Why Islamic fintech? | |
| 4. | Islamic fintech comprises of digital solutions or technologies that are deployed in Shariah-compliant financial activities and transactions, while upholding and entrenching Islamic rules and values. This includes promoting transparency, fairness and equitable risk-sharing in finance. |
| 5. | Meaningful adoption of fintech is especially critical as we battle a pandemic that has adversely impacted communities on a global scale, especially the most vulnerable segments of society - women, youth and the informal sector1, amongst others. |
| 6. | In addition, there is growing urgency to mitigate climate risk and adopt policies and measures that can ensure a sustainable future for our planet. |
| 7. | Given Islamic finance prioritises shared prosperity, social responsibility and inclusive participation, it is uniquely placed to lead this transformation and instil greater purpose in addressing socio-economic issues; thereby raising its societal role. |
| Developing the Islamic fintech ecosystem | |
| 8. | In encouraging the development of Islamic fintech, the SC is pleased to collaborate with the United Nations Capital Development Fund (UNCDF) to launch the first regulator-led Islamic fintech accelerator for the Malaysian capital market, FIKRA. |
| 9. | FIKRA, which means ‘ideas’, provides a collaborative platform to connect innovative start-ups with SC, UNCDF mentors, industry experts and investors. The goal is to build a vibrant and well-supported Islamic fintech ecosystem; one that nurtures talents, funds innovation, commercialises ideas and solutions, and creates jobs and opportunities. |
| 10. | I would like to wish a warm welcome and thank FIKRA’s industry partners, for participating in this collaboration which is pivotal to achieve FIKRA’s goals. Together, we can make Malaysia’s Islamic fintech ecosystem a resounding success. |
| 11. | For fintech aspirants and innovators, FIKRA will enable you to leverage UNCDF and other like-minded partners for relevant mentorship to refine your business model, ideas and solutions related to ICM. |
| 12. | You also stand to gain from regulatory guidance provided by the SC on securities laws early in the development stage. |
| Islamic Fintech Aspirations for ICM | |
| 13. | With global Islamic finance assets projected to grow close to $4 trillion in 20242, the use of digital technology would be key for Islamic markets to enhance their potential. |
| 14. | The development of Islamic fintech is thus an essential element for Malaysia’s continued positioning as a global Islamic finance centre2. |
| 15. | It also provides an opportunity to align the capital market towards socially impactful outcomes, which includes poverty alleviation, protecting livelihoods and supporting the needs of the underserved and lower-income segments. |
| 16. | For its pilot year and first cohort, FIKRA has three key challenge areas, namely, new ICM offerings, ICM accessibility and social finance. |
| New ICM Offerings | |
| 17. | For new Islamic Capital Market offerings, FIKRA’s first task is to solicit ideas on new products designed with Islamic principles and values at their core. |
| 18. | We hope to encourage the growth of offerings that can deliver the unique value proposition of Islamic finance. This includes a wider embodiment of wholesomeness (halalan toyyiban) to serve the needs of not just Muslims but also the wider community. |
| Access into ICM | |
| 19. | Secondly, FIKRA will also prioritise innovation that enhances accessibility and access paths to participate in ICM. |
| 20. | A significant challenge would be to bridge the funding gap for underserved segments, as well as attracting issuers and investors into the relatively nascent sustainable and responsible investment (SRI) space. |
| 21. | Given concerns in managing and growing hard-earned savings, it is also clear that we require solutions to address the lack of financial literacy and investor’s ability to initiate and retain long-term investments. |
| 22. | Ultimately, the aim is to enhance financial inclusion and address major social concerns such as old-age poverty and insufficient funds for retirement. |
| 23. | Without doubt, fintech is well-suited to promote financial inclusion. A prime example is the digital investment management segment which has seen significant participation from those with incomes below RM3,000. |
| Embracing Social Finance | |
| 23. | The third challenge area touches on Islamic social finance instruments such as qard hassan, as well as those that are based on or are linked to Islamic structures such as waqf and zakat. |
| 24. | The objective is to seek ideas or solutions that can integrate or facilitate touchpoints of these instruments, including proper utilisation, management and channelling of these benevolent funds. |
| 25. | The launch of SC’s Waqf-Featured Fund framework has provided the necessary traction for fund offerings that combine waqf features with the integration of commercial and social objectives. However, more needs to be done to accelerate Islamic social finance. |
| 26. | Among others, we also seek solutions that aim to enhance awareness, reporting and tracking of zakat – especially for zakat that is paid on investment gains generated through the Islamic capital market. |
| Conclusion | |
| 28. | Moving forward, we welcome those with ideas or solutions that can address the three challenge areas to join FIKRA, and be part of an innovative Islamic fintech ecosystem. |
| 29. | A facilitative and collaborative environment is vital to elevate our Islamic capital market to greater heights, and I am personally excited to see the outcomes of this programme. |
| 30. | Thank you all for joining us at today’s launch and I hope you will enjoy the Islamic fintech panel discussion after this. |
| Thank you. | |
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