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Malaysia is on the brink of a financial revolution, pouring massive investments into developing financial inclusion and boosting its fintech ecosystem. With investments skyrocketing and surpassing last year’s totals within just six months, the stakes are higher than ever.

But what does this mean for Malaysia’s future, and can local businesses rise to the occasion?

The Great Windfall: Malaysia’s Digital Bet

Let’s talk numbers. Malaysia is not holding back when it comes to investing in its digital future. According to a report by Business Today, Malaysia’s digital investments have soared to MYR 66.22 billion in the first half of 2024, which already surpasses the MYR 46.2 billion total investments of 2023.

That’s a large difference in just one half of 2024 already went by, and it shows vigorously how the Malaysian government is pushing hard towards a digital economy, one that can rival not only the neighbouring nations of the continent but globally!

But why such a massive investment, and why now? Financial inclusion is seen as a gateway to economic resilience and growth, especially for emerging markets like Malaysia. A digitally inclusive economy enables greater participation from all societal levels, fostering innovation and creating new market opportunities.

With a substantial portion of the Malaysian population still underbanked, there’s a massive untapped market just waiting to be served!

Malaysia’s Fintech Landscape: Current Realities and Potential

Malaysia’s fintech scene is buzzing, but it’s far from fully matured. The country hosts a mix of innovative startups, established startups and established financial players, experimenting with digital solutions. But one must not assume that becoming a fintech powerhouse is to just simply rolling out digital wallets and online banking apps.

The fintech world in Malaysia is pretty much varied, just like the rest of the globe. Payments lead the pack at 22% with lending and e-wallets both making up 13%. The remaining segments—remittances, insurtech, and wealth tech—each hold a 9% share! Some of the standout fintech companies from Malaysia are Jirnexu, MoneyMatch, and Policy Street, bulking the fintech growth within the Golden Peninsula’s bubble.

According to a report by Fintech Times, Malaysia stands out as a significant player in the ASEAN fintech sector, with around 549 fintech companies operating within its borders. This positions Malaysia third in the region, following the trails of Indonesia’s 785 fintech firms and Singapore’s 1,600!

PIKOM’s Point of View: The Potential is Already Surfacing

The National ICT Association of Malaysia (PIKOM) recently noted the increase in e-payment transactions, reaching MYR 11.5 billion and averaging 343 transactions per person in 2023. With an anticipated annual growth rate of around 20 per cent, reaching a target of 400 transactions per person by 2026 is well within sight.

So, what does the statement by PIKOM imply, exactly? Well, it’s fair to say that this surge in digital payments suggests a shift towards a cashless society and that in itself has been quite a trend for all the consumers of the nation.

Nearly all retailers now offer the convenience of QR code transactions, with e-payments like Touch n’ Go eWallet and ShopeePay widely available. Let’s also take a brief look at the cryptocurrency trend in Malaysia. According to Statista, the cryptocurrency market in Malaysia is forecasted to generate USD $306.60 million (MYR 1.41 billion) of revenue in 2024, with an anticipated annual growth rate (CAGR) of 7.82% from 2024 to 2028, the market is expected to reach a total of USD $414.40 million (MYR 1.91 billion) by 2028!

With that being said, MSME’s involvement in financial inclusion is essential. These businesses are the backbone of the Malaysian economy, yet many remain unbanked by traditional financial institutions. Hence, improving financial inclusion for MSMEs can lead to significant economic benefits, enabling these businesses to expand, innovate, and contribute more effectively to the economy!

It’s Now or Bust: Malaysian MSMEs Must Seize This Driving Opportunity

The stakes are clear: Succeed, and Malaysia could become a fintech leader in Southeast Asia. In fact, why not more? Build the best fintech tycoon in Asia and become one of the leaders in the world right now!

For MSMEs, the message is particularly pressing. These businesses have the most to gain from a thriving ecosystem. By leveraging digital tools and embracing innovation, they can expand their market reach, improve operational efficiency, and compete on a global scale!

According to the ASEAN Digital Economy Framework Agreement (DEFA), embracing seamless cross-border digital trade could make Southeast Asia a new digital powerhouse. But to capitalise on this opportunity, Malaysian businesses must adopt a forward-thinking mindset and be prepared to innovate!

Will Malaysia make it? Well, the ingredients are certainly there for success – investments, innovation, and a growing market. Nevertheless, it will still require effort from all players. Businesses need to adopt a forward-thinking mindset, consumers need to be open to change, and regulators need to balance innovation with protection.

It’s ‘make or break’ for Malaysian businesses – a chance to lead the change in a digital revolution that could define the country’s economic future!

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