{"id":28111,"date":"2017-01-31T16:18:12","date_gmt":"2017-01-31T08:18:12","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=28111"},"modified":"2017-02-06T09:32:29","modified_gmt":"2017-02-06T01:32:29","slug":"introduction-fintech-malaysia","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/introduction-fintech-malaysia","title":{"rendered":"Introduction To Fintech In Malaysia"},"content":{"rendered":"

This article is sponsored by Securities Commission Malaysia, under its InvestSmart initiative
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Scan the headlines of any newspaper today and chances are you might stumble across the word \u201cfintech\u201d or \u201cfinancial technology\u201d.<\/p>\n

Fintech is a phenomenon fuelled by the World Wide Web and mobile Internet revolution. Global professional services company Accenture found that investments in fintech across Asia-Pacific alone skyrocketed<\/a> in 2015, from about US$880 million in all of 2014 to nearly US$3.5 billion in just the first nine months.<\/p>\n

Globally, it is estimated<\/a> that the value of fintech investments will amount to about US$40 billion by 2020.<\/p>\n

In Malaysia, the presence of fintech is still nascent but growing rapidly, sometimes drawing nervous reactions from major players and regulators.<\/p>\n

Bank Negara Malaysia Governor Datuk Muhammad Ibrahim has also reminded banks of the threats posed by fintech, citing a report by McKinsey that 10% to 40% of banking revenue is possibly at risk by 2025 due to innovations outside banking institutions.<\/p>\n

But to be fair, while Malaysian banks are quick to point out that fintech disrupts businesses, they are embracing the movement<\/a> either by coming up with their own fintech innovations or working with fintech start-ups.<\/p>\n

<\/span>What is fintech?<\/strong><\/span><\/h2>\n
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\u201cFintech\u201d is a line of business based on using technology to provide financial services. Financial technology companies are generally start-ups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on technology.<\/p>\n

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Equity crowdfunding (ECF) is one example of fintech. In 2015, the Securities Commission Malaysia (SC) approved<\/a> six ECF operators to provide alternative funding platforms for small businesses and entrepreneurs.<\/p>\n

Another growing area in fintech is peer-to-peer or P2P lending, where online platforms help to match borrowers with lenders, and bypassing the banks.<\/p>\n

It has attracted the involvement of big names such as Goldman Sachs, and US-based Lending Club has made a name for itself in the P2P space as the world\u2019s largest online credit marketplace, facilitating personal and business loans.<\/p>\n

After launching its service in 2007, it became the largest technology IPO in 2014, raising around US$1 billion. In Malaysia, the SC introduced the regulatory framework for P2P, setting out requirements for the registration and obligations of a P2P operator as provided in the revised Guidelines on Recognised Markets <\/em>(the Guidelines<\/em>) in May 2016.<\/p>\n\n\n\n\n\t\n\n\t\n\t\n\t\n\t\n\t\n\t\n\t
Notable Malaysian fintech start-ups<\/center><\/th>\n<\/tr>\n<\/thead>\n
\"\"<\/a><\/td>\u2022\tEnables users to exchange currencies at midrate, saving them up to 3% per transaction.<\/td>\n<\/tr>\n
\"\"<\/a><\/td>\u2022\tThe local chapter of the world\u2019s fastest growing fintech collaboration platform built by a global network of innovators, communities, events and programmes.<\/td>\n<\/tr>\n
\"\"<\/a><\/td>\u2022\tHelps users locate outlets that offer the best exchange rates, avoiding any extra and hidden costs from using credit cards and ATM services abroad.<\/td>\n<\/tr>\n
\"\"<\/a><\/td>\u2022\tA crowdfunding platform for students seeking funds for higher education scholarships.<\/td>\n<\/tr>\n
\"\"<\/a><\/td>\u2022\tCloud-based iPad point-of-sale system that features full-fledged inventory and customer relations management. <\/td>\n<\/tr>\n
\"\"<\/a><\/td>\u2022\tFinancial comparison site for users to compare and easily obtain loans, credit cards and other financial products.<\/td>\n<\/tr>\n
\"\"<\/a><\/td>\u2022\tA rewards-based crowdfunding platform.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n

<\/span>How is fintech regulated?<\/strong><\/span><\/h2>\n

In Malaysia, the Securities Commission\u2019s amended<\/a> its Guidelines on Recognised Markets<\/em> and launched a regulatory framework for P2P lending, allowing small and medium-sized companies access to this avenue for debt funding.<\/p>\n

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Some key points under Chapter 13 of the Guidelines on Recognised Markets[1]<\/em><\/p>\n