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JOURNAL OF TECHNOLOGY MANAGEMENT AND TECHNOPRENEURSHIP

Fintech Revolution in Malaysian Banking Industry

Saleh Ali Husseini

AL-Furat University, Deir ez-Zor City, Syria

Abstract
The innovative use of technology in finance is posing challenges to many traditional business models for the
application of cutting-edge technologies to financial services at a global level (a phenomenon known as Fintech). From
there, we analyze the implications that this trend is having on the development of the banking system, with particular
focus on the case of Malaysian banks. In this field, digital platforms are competing vigorously, although large technology
companies have clear advantages (most regarding user data) should they decide to enter Fintech full-on. It is worth
mentioning the specific business approaches of Google (cloud service - cybersecurity -Big Data), and the “digital-wallets”
are growing as important alternatives within the context of financial markets, representing a source of tension for the
traditional banking business. The conclusion is that the traditional banking industry perceives latent competitive threats
from this Fintech revolution. That is why it has awakened in recent years with waves of acquisitions-alliances with
Fintech start-ups.

Keywords: Fintech, Banking industry, Malaysia.

1. Introduction

The market of Fintech is lucratively attractive and potential for handsome profit. (Surendra, 2017)reported
that estimation of investment in Fintech globally reaching up to USD 40 billion. Although it is reported that
the users of Fintech globally are still small, as it is now in nascent stage, the report from (Pollari &
Ruddenklau, 2018) has shown that the growth rate of adoption is fast up to three times. Currently, the
adoption index of Fintech globally is 15.5 percent and it is estimated can be tripled within a year, provided

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there are awareness on the adoption. This is quite fast compared to the report in 2016 by International Trade
Administration (ITA) from US Department of Commerce which stated that the adoption rate can double
within a (International Trade Administration, 2016). In Indonesia, the transaction value via Fintech in 2016 is
worth RPI 199 trillion(Dwi Marlina & Alex, 2017). In the case of Malaysia, Fintech in Malaysia is still in
infancy stage but growing rapidly. Securities Commission (SC) is the first fintech regulator in ASEAN. SC
has amended the Guidelines for Recognized Market, as part of regulatory(HAYS, 2019) framework for P2P
lending, allowing small and medium-sized companies access for debt funding (Surendra, 2017). Minister of
Finance II (year 2016-2018), Dato’ Seri Johari Abdul Ghani has mentioned in Malaysia Fintech Expo 2018
that government of Malaysia will guarante the condusive economic environment to support the Fintech
industry to ensure no glitch in the digital business (Hazwan Faisal , 2019). He also reporting that digital
economy has contributed to the Gross Domestic Product (GDP) about 17.8 percent in 2016 and estimated to
reach 20 percent in 2020.

The purpose of the study: determining the impact of financial technologies on various subjects of the
financial market to identify prospects for development financial market in particular market. The scientific
significance is the development of theoretical and methodological foundations for the management of
financial technologies by various subjects of the financial services The results of this work will contribute to
further theoretical and practical market research Fintech in Malaysian and Asian market.

2. Literature Review

The term “fintech” stands for “financial technology services”(Arner & Buckley, 2017) (Anand &
Mantrala, 2018). To begin with, it should be clearly understood that fintech companies are not a homogeneous
lot. Rather this label applies to a 12 disparate set of companies aiming to serve different needs of financial
customers – whose common feature is the reliance on digital technologies to deliver solutions. The usage of
the term ‘Fintech’ dates back to the early 1990’s when Citibank group initiated a ‘Financial Services
Technology Consortium’ to facilitate technological cooperation efforts amongst banks (Anand & Mantrala,
2018). Ironically, today, the term is used to define the most challenging competitors of banks, namely, the
“new and emerging firms entering the financial sector that use technological advancements to provide better,
quicker and more cost-efficient services to the customers than that given by the banks”. FinTech are seen as
innovative entities that have stepped in to exploit the divide that exists between the new demands of the
connected customers and the outmoded services of the traditional banks which are bound by industry
regulation, as well as their longstanding structure and corporate culture. FinTech have effectively unbundled
the traditional banks’ offering with different fintech entities specializing in different components such as
payments, foreign exchange, lending, access to capital markets, financial advisory services, and consumer
banking. For example, this is true of financial crowdfunding platforms and virtual currencies, which have the
potential to cut bank intermediation out of the equation completely. But to fully appreciate the position of
traditional banks relative to new fintech today, it is relevant to go back much further than the last decade to
recall three main eras of fintech evolution (“Fintech 1.0”, “Fintech 2.0”. and “Fintech 3.0”) (Anand &
Mantrala, 2018).
Specifically, during the Fintech 1.0 period, lasting from about 1866 to 1987, the growth of banks and
financial services industry was indeed heavily influenced by technology, although it remained largely an
‘analog’ industry in the perception of the public. For example, the introduction of the telegraph, first
commercially used in 1838, and the laying of the first successful transatlantic cable in 1869 (by the Atlantic
Telegraph Company) provided the basic infrastructure and impetus for the first major period of financial

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globalization in the late19th 13 century. Subsequently, the introduction of the Automatic Teller Machine
(ATM) in 1967 by Barclays Bank(The Telegraph, 2017) undoubtedly marks the beginning of the modern
fintech revolution in the industry About the same time , there was a shift from telegraphic to the electronic
mode of banking, and the introduction of services such as Inter-Bank Bureau(Anand & Mantrala, 2018),
Clearing House Interbank Payments System (CHIPS- US, 1970) and Society of Worldwide Interbank
Financial Telecommunications (SWIFT- 1973) in the payments area. The securities area was marked by the
establishment of NASDAQ in 1971(Nasdaq., 2013). Interestingly, as should be evident from the above
history, banks were in fact the pioneers in the introduction of financial technologies. It is banks who first
launched the precursors of consumer online banking, namely, home banking (i.e., the use of a numeric keypad
to send tones down a phone line with instructions to the bank) at the beginning of the ‘80s. In particular some
of the earliest services started in New York in 1981 when four of the city's major banks (Citibank, Chase
Manhattan, Chemical and Manufacturers Hanover) home banking services using the videotex system(Anand
& Mantrala, 2018). However, because of the commercial failure of videotex, these banking services never
really took off. The Fintech 2.0 period roughly spans the years 1987 to 2008. During this period, it was the
traditional regulated financial services industry that became more globalized as well as digitized and banks
continued to be the leaders in the use of technology to provide financial products and services. They were in
fact the prime purchasers of IT products and services globally (This trend has continued since the mid-90s
with traditional financial services industry’s total spending on IT at over US$ 197 billion in 2014.) There is
much truth in one bank executive’s statement that “The biggest and most successful fintech in the world is the
bank” (Anand & Mantrala, 2018).
More specifically, despite the failure of the early home banking services, banks continued to be very
enthusiastic about the opportunities presented by the emerging Internet-based online banking technologies
and, Wells Fargo was the first to introduce World Wide Web, to provide customers with online account
checking in 1995 (Wells Fargo, 2015). The appeals of online banking for banks were the prospects for
diminished transaction costs, easier integration of services, interactive marketing capabilities, and other
benefits that could boost customer lists and profit margins. More specifically, banks saw online banking
services as a way to bundle more services into single packages and market them, thereby deriving more
customer value while minimizing overhead. Therefore, in sharp contrast to what we have said earlier about
banks’ myopia with respect to today’s connected customers, in the late ‘90s banks were eagerly pushing
online banking services while it was their customers who were resistant to change! Customers’ reluctance to
adopt the new online banking services essentially stemmed from a widespread lack of confidence in the
security of financial transactions made online. As a result, customer use grew very slowly. For example, it
took Bank of America 10 years to acquire 2 million e-banking customers! However, as early e-commerce
platforms like America Online, Amazon.com and eBay made customers more comfortable with the idea of
shopping and paying for items online, and the Y2K crisis passed, a sea-change took place among consumers
and the growth in online banking customers steeply accelerated. For example, in October 2001, Bank of
America customers executed a record 3.1 million electronic bill payments, totaling more than $1 billion. By
2006, 80% of US banks offered online banking and by the end of the Fintech 2.0 period, Gartner Group
estimated that almost half of United States adults and 30% in the United Kingdom used online banking(Anand
& Mantrala, 2018).
Since 2008 (the period we characterize as “FinTech 3.0”), however, banks’ grand vision to employ the
new online banking as a means to offer more bundled services began to unravel as new start-ups, staffed by
bank techies recently unemployed because of the financial crisis, and established technology companies hit
upon the latent needs of the connected and millennial consumers. These Fintechs began to deliver unbundled
financial products and services directly to businesses and the general public. In effect, the new fintech entrants
were catering to augmented needs for unbundled services that were the exact opposite of what the banks were
hoping to achieve with more profitable bundled solutions(Anand & Mantrala, 2018). That is, many of the new
fintech challengers promised to disintermediate the relationships between traditional banks and their customer

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bases by slicing off and specializing in the high-ROE segments of banks’ offerings. Notably, most new
fintech players do not want to be banks and are not asking customers to transfer all their financial business at
once. They are instead offering targeted (and more convenient) services. The new digital platforms often
allow customers to open accounts effortlessly, and once they have an account, switch among providers with a
single click. Examples include: Platforms such as NerdWallet (in the United States) or India’s
BankBazaar.com aggregate the offerings of multiple banks in loans, credit cards, deposits, insurance, and
more, and receive payment from the banks for generating new business(Jangra, 2014). Wealthfront targets
fee-averse millennials who favor automated software over human advisors. Lending Home targets motivated
investment-property buyers looking for cost-effective mortgages with accelerated time horizons. In 2015,
global investment in fintech companies totaled nearly $20 billion. In the meantime, incumbent banks were
preoccupied with rebuilding the financial system and complying with new rules and regulations in the wake of
the 2008 financial crisis. To summarize, by mid- 20th century, banks were in a dominant position in nations’
economies(Frame, Wall, & White, 2018). They had led in the introduction of electronic technologies but were
largely product- 16 centric and slow in introducing newer technologies that addressed their evolving
customers’ unmet needs. In particular, the shift in product services was not accompanied by complementary
customer service enhancements. The basic services of banking still required customers to stand in long
queues, wait for days before they could open an account, and go through a grueling, unfriendly loan approval
process.8 The focus on customers’ expressed needs and myopia with respect to their latent needs left many
customers, especially millennials, dissatisfied and ripe for plucking by new entrants. Additionally, industry
regulators focused on protecting banks and their customers required any change in the banking structure to be
well scrutinized, pilot-studied in a longitudinal setting, and validated before any innovation could be actually
approved (Trelewicz, 2017). Regulations simply did not allow banks to adopt radical innovations as quickly
as new fintech entrants. Last but not the least, tacit collusion rather than fierce rivalry between global banks
still allowed them to earn a good margin on their services thereby greatly reducing the incentive to develop
and enhance their customer relationships(Milne, 2019). Some evidence of such tacit collusion is provided by
Indian Banks’ MCLR (Marginal Cost of fund based Lending Rate which is the minimum rate at which a bank
can lend) history. Until the end of 2016, there was little variance in the MCLR of various banks. But such
apparent tacit collusion has been drastically disrupted from the beginning of 2017 as large banks have come
under considerable competitive pressure from new-age Indian ‘nonbank financial companies’ (NBFCs)
(Anand & Mantrala, 2018).
The researcher searched for articles published from 2016 to 2019 in Scopus based on the keywords
‘fintech impact AND financial services AND disruptive innovation OR business model’. A total of 30
documents were obtained from the search and organized in descending order of their number of citations in
Microsoft Excel. The abstract from 30 of 30 papers was read to rank these papers depending on their
significance to the topic of research.20 out of 30 documents were chosen for afterwards analysis. Due not
availability of all the chosen research paper 10 were red and analyzed. The read articles were further
categorized, and concepts covered were summarized. The following are among the innovations in Fintech
around the globe. It will be increased more soon as the invention is fast and the success stories are ubiquitous
as shown below in Table 1.

Table 1: Review of Literature in FinTech

No Authors & Year Keywords and Concepts Covered
1 (Clavijo, Vera, This paper of a bank-survey on the development of Fintech-Digital Banking in Latin
Londoño, & America. Being aware of Fintech´s competitive threats In addition, results suggest that
Beltrán, 2018) the region shows favorable elements of development in digital banking supply, although
there are persistent lags of adoption of those digital banking services on the demand side
(where most users still prefer traditional banking channels such as physical offices).

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2 (Rahim et al. The review found that smart contract is currently in the early stage and so is Islamic
2019) FinTech. The scholars agreed that FinTech is a Maslahah (interest) to mankind's benefit.
However, the smart contract is still in discussion and review.
3 (Marko, 2018) the article evaluates the role of distances, artificial intelligence, and behavioral biases.
Implications for stability in banking are explored. We argue that relationship banking can
overcome its drawbacks, but it needs to adjust to the new reality in order to survive.
4 (Zubairu, 2019).. The results reveal that users’ trust in Fintech services has a very significant influence on
users’ attitudes for adoption. In addition, perceived ease of use and perceived risk does
not affect users’ attitudes toward the adoption regarding Fintech services. This study
contributes to the literature of the adoption of Fintech services by providing a more
comprehensive view of the determinants of users’ attitudes by combining trust of Fintech
services with TAM.
5 (Henner et al, Financial services, financial technology, business model, services taxonomy. Authors
2018) analyzed main characteristics of 227 customer oriented Fintech start-ups using 15 criteria,
which are included in 3 perspectives interaction, data and monetization. The investigation
helps to understand archetypes and characteristics of Fintech companies.
6 (Lee & Jae, Business models, Disruptive innovation, Financial startups, Fintech, Online banking Real
2017) options. This article develops architectural view of financial technologies and describes
their ecosystem. The author breaks down the understanding of terming Fintech and
describes main form of Fintech enterprises and challenges for Fintech businesses. Where
he identifies risk management as main factor which Fintech companies should evaluate
better.
7 (Lee & Jae, Digital Finance, FinTech, e-Finance Literature review, Future research opportunities.
2017) This paper represents the research on various spheres of financial services and the
tremendous impact of financial technology on each of it. It also covers ideas about
possible development of innovative business models.
8 (Zalan & Banks, Disruptive innovation, Emerging markets, Financial services industry, Fintech.
Toufaily, 2017) The research gives important knowledge about the possible steps of traditional banking
from the banks’ board point of view.
9 (Davis, & Foo, P2P lending, Fintech regulations, Indonesia fintech. The research covers such topics as
2017) fintech regulations approaches in Indonesia and globally in the world, identifying that
risk and opportunity of fintech in emerging markets is considerably higher than
developed countries.
10 (Trelewicz, Data analytics, Financial sectors, FinTech, IT, Technology development. The article
2017) analyses the trends and patters of financial technology usage in various spheres.
Information provided by the author shows the current usage of big data in various
industries and intends on high tech future of the banking
11 (Leyer & Pisani, Financial service, Innovation management, Performance management, Structural,
2017) equation modelling work organization. The paper describes the factors and methods used
in companies which generate innovation and its adoption. With quantitative analysis
being used, and data gathered from non-public financial services companies.
12 (Susan et al., Technology adoption, Bank performance, Financial services, Network innovation,
2017) SWIFT. This paper combines insights from several different research approaches to
identify the impact of information communication technologies(ICT). Particularly paper
investigates the impact of SWIFT technology adopted in 1970 on European and
American banks in long-term perspective. Furthermore, research distinguish the ICT
influence depending on the size of the financial service provider.

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13 (Das, Verburg, Innovation projects, Financial services, Disruptive innovation, Radical innovation,
Verbraeck, & Innovation barriers. The research paper represents in depth investigation on the barriers
Bonebakker, large financial
2017) service provide face in ideas, projects and
processes in adoption of innovation.
14 (Daichi, 2017) Bank API, Banking system, Big data, Business model, Financial operations, Internet
Online. The article covers the historical changes that technologies brought to the industry
of financial services. Author of the article stresses his attention mostly on big data and
capabilities AI, suggesting that in very near future technologies will be able to substitute
plenty of financial operation and contribute positively on banking B2B and B2C
segments.
15 (Maria & Peruta, Banking sector, Information technology, Performance, Technological innovation. This
2017) paper describes the benefit that banks have achieved by adopting IT innovation to the
industry if financial services. The researchers had identified that only innovative software
and human resources are core the in positive results of bank. Particularly it was
discovered that software for measuring credit risk and ERP have been making the most
positive impact on banks’ performances.
16 (Xie & Liu, The research covers topics of internet finance in China. The country where financial
2016) technology industry has made very rapid growth. Integration of innovative payments
options, implementation of negative and positive policies are the main topics discussed
be the authors. It was noted by the authors that ‘internet finance’ used in their work has
the same concept as FinTech.
17 (J.Kauffman, Debit cards, Financial service, Internet banking, This research paper aims to analyzes and
2016) predict future patters of usage of Internet banking, cash, credit, and debit cards.
18 (Nejad, 2017) Literature review, Financial innovations, New financial services, New products. This
paper represents quantitative analysis on innovation in financial industry. Strong
theoretical background of the research summarized by impact if 6 main topics and their
influence in banks’ services reshaping
19 (Brühl, 2017) Virtual currencies, Bitcoin, Blockchain, Distributed ledger, Financial services. The author
of the research paper discusses how new virtual currencies are affecting the payment
systems. Furthermore the author stresses that the main influence on financial markets and
institution will be coming from the Blockchain technology rather than from digital
currencies themselves.
20 (Chen, 2016) Fintech, financial schematization, financial inclusion. This article has documented the
rapid growth of Fintech in China. The analysis of its causes suggests that successful
integration between finance and real-life needs is a reason for this fast growth.
Technological progress enables finance to serve real-life needs better. The success of
innovation thus rests not on the technology itself, but on how well finance serves
business and real-life needs. China’s experience fresh light on the development of
financial innovations, and especially on inclusive finance

Source: Depended on Review of Literature

3. Fintech Development in Malaysia

In the recent, The Global Economic Competitiveness Report 2017–2018 published by The World Economic
Forum (WEF) on 26 September 2017(Forum, 2017), Malaysia has successfully moved up one place to the
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23rd position from the 24th spot in the 2016-2017 report(Hakim Ghazali, 2019). The report indicated that
economy of Malaysia and its financial market development had grown steadily ever since the oil price crisis
in 2011 and one of the most competitive emerging economies in the Asia region. However, also shown in the
report was that one of the significant challenges for Malaysia to increase business activity in the country is the
access to financing as illustrated in Figure 1 below. Realizing the fact that these new innovative finance of
FinTech can benefit SMEs and start-ups in Malaysia, as well as the disruptive risk it brings to the traditional
financial institution, the Malaysian Government through its Central Bank of Malaysia has taken a positive
approach to managing and adapting to the emerging risk emanating from these new solutions. P2P lending
and Crowdfunding which are part of Fintech have been officially recognized by the Malaysian Government
since October 2016 through the introduction of Fintech Regulatory Sandbox Framework(Hakim Ghazali,
2019).

Source: The Global Economic Competitiveness Report 2016-2017, World Economic Forum (2018)
Figure 1. Most problematic factors for doing business in Malaysia.

Malaysia become the first Asia Pacific nation to regulate for equity crowdfunding in its drive to develop the
FinTech agenda. Later in November 2016, Securities Commission of Malaysia (SC) announced six P2P
Financing Operators in Malaysia to widen financing options for small and medium enterprises (SMEs). Apart
from Malaysia, other countries such as United Kingdom (UK), Hong Kong and Singapore are also adopting
regulatory sandbox to provide flexible regulations for the FinTech companies to test their innovative product
and services. However, the regulatory sandbox in Malaysia is a little bit different from the others. For
example, in Malaysia, only authorized firms with a track records can participate in the sandbox while in the
UK, both authorized and unauthorized firms may apply for the participation. SMEs and start-ups. However,
there are challenges from demand-side such as the lack of financial knowledge or awareness of many
entrepreneurs and business owners on this alternative financing instruments. Most of them are unaware of the
existence of alternatives to bank lending and, even if they are, are often unable or unwilling to comply with
the requirements of professional investors. Consequently, prevents SMEs and start-ups from seeking out the
instruments that are most suited to their needs(Hakim Ghazali, 2019). According to a report by Accenture (a
global management consulting, technology services and outsourcing company) (Saksonova & Kuzmina,
2017), fintech is one of the fastest growing sectors of the economy. Investments in the industry have increased
rapidly reaching 12,2 billion dollars in 2014, while in 2008, it was only 930 million dollars. The highest
increase was observed in Europe (Accenture, 2015). Table 1 summarizes statistics on investment in fintech in
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the USA, Europe and Asia for 2014-2016.

Тable2. Investment in FinTech, 2014-2016

Region 2014 2015 2016
USA 14.1 27.4 13.5
Europe 12.0 10.9 2.2
Asia 3.3 8.4 8.6
Source: (Accenture, 2015)

As can be seen from Table 1, the total volume of investment in fintech in these regions was $46.7 billion in
2015. In 2016 it fell to $24.3 billion, but this does not mean a decrease in interest towards this field of activity
in general.
Study on awareness of FinTech has been carried out in many countries such as United Kingdom (UK), Latvia,
Finland and many more. (Saksonova & Kuzmina, 2017)reported that consumers were unaware of FinTech
services in Latvia and their associated innovations and new financial product. In the UK,(Baeck et al , 2014)
reported that the level of awareness, as well as the nuances of perception about alternative finance among
consumers and SMEs in the UK, was very low. As for the countries in Asia, no specific journal was found on
the survey of awareness particularly between SMEs and FinTech in each country. However, there was a report
from( Ernst &Young, 2017) as shown in Table 2 regarding FinTech Adoption Index in for Asia countries such
as China, Japan, India, Singapore and Hong Kong, but still, no data was highlighted for Malaysia.

Table 3. Adoption Rate Study countries in FinTech Development

Country Adoption Rate (%)
China 69
India 52
United Kingdom 42
Australia 37
United States 33
Singapore 23
Japan 14
Source: Ernst and Young (2017)

Before 2000, the Chinese financial industry was lagging behind those of many other countries, and the
financial infrastructure was insufficient, and commerce-related fraud was commonplace (Shim & Shin, 2016).
However, since the establishment of Alibaba in 1999, now is the largest e-commerce company in China, the
contribution of FinTech to the growth of SMEs and economy of China has started to be noticed. In 2014,
following the government’s approval, a total of 250 companies in China received a payment license, including
90 for online payment and 37 for mobile phone payment with Alibaba as the frontrunner. As for July 2015,
China's peer-to-peer (P2P) lending platforms counted 2,136, with settlements of about RMB82.5 billion
transactions in that single month, making it the country with the most P2P platforms in the world. It is further
reported the platform has delivered directly to the public and SMEs more than RMB251 billions of credit in
2014m. (Saksonova & Kuzmina, 2017). As cited by (Asaba et al, 2016) based on China case study, there are
three conditions observed to be important as essential success factors for the FinTech industry to support the
growth of the SMEs: the digital technology adoption level of the SMEs, the financial literacy skills, and the
regulatory frameworks. A simple comparison study as shown in Table 3 on above factors was also done
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between China and Malaysia to see the readiness of FinTech industry in Malaysia in supporting SMEs and
start-ups.
Table 4. Comparison Study Between Malaysia and China in FinTech Development.

Source: Asaba et al. (2016)

4. Discussion and Research Implications

With the wave of new fintech companies entering Malaysia, a question that often pops up in conversation is
whether the banks are asleep on the wheels or are they actively beefing up their tech portfolio in response. we
study top 6 banks in Malaysia to understand their views on fintech and what they’re doing for fintech.
Maybank
Being the largest bank in Malaysia, it is no surprise that Maybank is amongst the first few banks embracing
fintech. Historically Maybank has always been quick to adopt new technology as evidenced by the fact that
several years back Maybank was one of the first to implement online banking. In 2015 Maybank organised
the Maybank Fintech 2015 in partnership with local VC firm L337 Ventures and over 100 technology
companies from 10 countries took part in the event. In 2016 Maybank will target at least 200 companies to
take part in the initiative(Bank tech Asia, 2018). Maybank sees Maybank Fintech as a tremendous opportunity
for themselves to harness the startups ecosystem regionally, to acquire the best innovation ideas in financial
technology(Bank tech Asia, 2018)y. Their focus for this year will be in the areas of:
• Mobile Banking
• Payments
• Lending
• Distributed Database (Blockchain)
• Asset Management
• Humanising Financial Services (Financial Inclusion)
• Security
• Islamic Finance
• Big Data
Maybank Fintech programmer is a unique platform for aspiring innovators to showcase their ideas. We want
to be a central member of the Fintech community in the region, to help grow and support entrepreneurs, by
providing them with an avenue to connect directly with the financial industry(Bank tech Asia, 2018).
CIMB Bank
With 7.5 million customers in Malaysia alone and over 40,000 employees across the ASEAN region, CIMB
bank is Malaysia’s second largest bank. CIMB launched their incubation programme known as Inn challenge

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in May 2015(Engine, 2019). The goal is the ideation and creation of new fintech solutions. In this programme,
both CIMB and the Malaysia Digital Economy Corporation (MDeC) actively mentored the fintech
startups(Bank tech Asia, 2018). They have picked 4 winners from that pool of fintech startups and they are
currently developing the bank’s digital and mobile banking solutions. Logically, CIMB also hosted the 2016
session and it had focus on the following areas:
• Loyalty & Rewards
• Identity, Security & Document Management using blockchain Remittances
• Mobile Payments
• P2P
• Digital Wallets

CIMB bank worked with Startupbootcamp in 2015 to mentor the fintech startups in Singapore on top of their
Inn challenge. This partnership’s main reason is to scout for, and evaluate, new technology and ideas for the
future. “One of the main reasons why we are tying up with Startupbootcamp Fintech is because CIMB has
always been focused on technology(Bank tech Asia, 2018).
RHB Bank
With a network of 210 branches in Malaysia and 19 across nine Asian countries, RHB Bank is the 4th largest
bank in Malaysia. Through this partnership, RHB aims to bring digital innovations to the banking market in
Malaysia(Engine, 2019). Here, RHB will evaluate, fund, mentor and also organise hackathons in Kuala
Lumpur. Other than just working with fintech, the group will also be spending 20% of their capex this year to
execute new digital strategies. customers can expect to see the integration of seamless and innovative digital
solutions from some of the best global and regional fintech companies(Bank tech Asia, 2018).
AmBank
AmBank is among the top-tier banks in Malaysia, employing over 12,000 employees with a network of 175
branches. AmBank is the latest bank in Malaysia to throw their hat in the ring(Bank tech Asia, 2018). The
Group CEO Datuk Suleiman Mohd Tahir was quoted saying that the inclusion of fintech towards better
mobile banking, cash management and understanding customer behavior is now becoming very important to
the bank(Engine, 2019).
Datuk Suleiman also mentioned that their approach towards fintech will be through the banks current partner
and shareholder ANZ. The plan to embrace fintech is reported to be ready in six months. While it is
encouraging to see banks taking an active step with accelerator programmers, there has been no major
announcement related to tangible results or solutions coming out of these exercises. One can only speculate
that perhaps these banks are waiting for the regulatory framework to be released in July 2016 or that the
products are simply not market ready (fintech Malaysia, 2019.
It is interesting to also note that out of the five top banks in Malaysia only Public Bank and Hong Leong Bank
has not made any major announcements about their fintech play. Though, Raja Teh Maimunah who is the
CEO of Hong Leong Islamic and the COO of Digital Innovation and Transactional Banking has been seen
actively presenting keynotes within the fintech circuit. Therefore, it is not unlikely that the bank would be
influenced by her vision of fintech and make an announcement in the months to come(Bank tech Asia, 2018).
Public Bank
overall Vic is positive on the outlook of fintech in Malaysia, he feels that the mobile processing power
improvements, liberalization of the regulatory guideline by Bank Negara will do wonders for the sector. At
the same time, he also feels that the introduction of Chinese players like Alipay and Tencent’s WeChat Pay
will shake up the local market with incumbents investing to maintain their foothold against the Chinese
giants.Mobile payment is the buzz now and will go main stream from 2018 onwards” said Vic in keeping with
Public Bank’s pragmatic nature, when Vic commented on the bank’s response he emphasised that Public
Bank has and always will be prioritising shareholder’s value, adding that while they embrace technological
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changes they will remain prudent at all times and only priorities initiatives that have a clear economic
value(Fintech Malaysia, 2019).
Hong Leong
Domenic Fuda, CEO and Group Managing Director, Hong Leong Bank feels that the fintech landscape has
really been flourishing this past 3 year with both homegrown and regional players entering the market. He
believes that the fintech ecosystem has much room to grow in Malaysia especially in areas like lending and
KYC, while payments are wallet he opines are more crowded than others(Engine, 2019). The growth in
FinTech has been impactful at innovating and disrupting financial services – it opens up not only the eyes of
the consumers, but also awakens incumbents to the possibility that there may be new avenues of delivery and
fulfilment. However, only a select few of these FinTech will win in the long run(fintech Malaysia, 2019).
Whereas Public Bank’s playbook still remains unknown, the industry is skeptical if there will be any major
moves from the bank, which is understandable as Public Bank has always been the more conservative player
when it comes to technology despite being the most profitable bank in Malaysia. At the time of writing, only
four banks have made announcements of the fintech play. The next few months will be an interesting one to
observe to see who else will join the fray.

5.The Challenges Facing Due to Fintech

There are several challenges that commercial banking industry is facing nowadays. Banks are not making as
much money as they used to do decades ago, while the consumers expectations increase as well as regulatory
requirements. But all these challenges are not putting as much pressure on conventional banking as
innovative, simple and fast software-as-a-service(SaaS) start-ups do(Guliyev, 2018). Fintech start-up
investments have started growing rapidly (Figure 2) since 2013, and reached annual investments of $8 bln.
only in Europe(Guliyev, 2018). Banks in order to cut the costs have to decrease their physical presence, as the
customers prefer to interact with banks online. Only in UK banks had to shut down 1,000 bank branches in
the past 2 years, while in U.S this number equals to 1,700 from June 2016 to June 2017(Guliyev, 2018).
Besides affecting banks, fintech revolution also negatively affects employees of those banks which have to cut
personnel amount in order to sustain. Australian top 4 banks are planning to cut 20,000 work places only in
2018, and that is about 10% for some of them (Guliyev, 2018).One commercial senior banker stated:
“Commercial customers will be most affected. This technology is more useful for retail, personal accounts.
For example, when paying bills, it’s easier to use an application.” FinTech “will not affect corporate banking
services or private banking ones but it might affect some retail banking segments ” (Zalan & Toufaily, 2017).
What does make fintech so attractive for customers in digital era?

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 Saleh Ali Husseini./ Journal of Technology Management and Technopreneurship 10 (2) 36-49 47

Figure 2. The reason Customers adopt fintech

Source:(http://www.visualcapitalist.com/how-fintech-digitally-disrupting-financial-world/)

The chart above (figure 2) displays that the simplicity and better prices have been wining criteria for fintech
companies. If ease of accessibility of fintech could be understood by using application, then what stands
behind cheaper prices? Some critics say that recent start while reinventing their business model can afford
providing cheap service due easy and free funding sources such as interested investors. Some of the startups
rely on their customers: Number26 assumed that their free withdrawal service won’t be used very much. Their
assumptions were wrong, hence they had to shut down them (Guliyev, 2018).

6.Conclusion

In the abyss of modern news resources, here could be noted that the bank with international experience and
huge capital base fells itself more comfortable endorsing and stimulating the fintech development in the
markets where present. With a fintech framework in the pipeline, most major banks are working with fintech
in one way or another and several promising players in the local fintech startup scene, Malaysia’s fintech
space while not fully matured definitely looks hopeful. As we speak, more and more fintech startups are
emerging locally. Perhaps, soon we will have even more startups in Malaysia. and we think Malaysia will rise
to be a gateway for fintech in Asia Pacific and not will Malaysia lose the race to some of its competitive
neighbors. Nevertheless, as a fellow consumer I am sure we will all benefit from this fintech arms race. That
the traditional banking industry perceives latent competitive threats from this Fintech revolution. That is why
it has awakened in recent years with waves of acquisitions-alliances with Fintech startups in order to achieve
better provision although there are persistent lags of adoption of those digital banking services on the demand
side (where the majority of users still prefer traditional banking channels such as physical offices). Malaysian
banks project that, during 2025, will trothing that their reactive innovation strategies will be enough to
maintain their banking leadership.

7.Research Limitations

Perspective of a fintech start up founders would have great value add to this work, making a quantitative
research regarding this topic could bring even more insight about the market. The main challenge of
quantitative research would be difficulties in finding highly qualified experts who would be willing to fill out
the survey.
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