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As Malaysia gears up for the next big leap in financial innovation, the spotlight is on fintech companies poised to flip traditional banking and investment practices. 

And in the fast-paced world of finance, you can’t just brush off how much technology can shake things up.

Looking back over the past four decades, we’ve witnessed a remarkable evolution in how we approach technological advancements. We’ve gone from mapping out space to driving environmental sustainability, all thanks to constantly adapting to technological advancements.

Here are some key insights on how fintech can keep riding that wave in Malaysia, according to KL20 Summit 2024 industry players.

1. Digitalisation is a must have, through AI and automation.

The shift towards digitalising financial services isn’t just a passing fad—it’s become a must-have.

Cyfirma founder and CEO Kumar Ritesh pointed out how the shrinking costs from digitalisation benefit both businesses and customers alike.

“By observing the shrinkage in costs for today’s methods, it leads to the observation of intriguing patterns in monetisation from India or China, which may be applicable in Southeast Asia,” he said. This can also help with defining potential investment opportunities.

He added that fintech firms must leverage digital solutions to streamline processes, enhance efficiency, and deliver seamless user experiences.

Cyfirma founder and CEO Kumar Ritesh / Image Credit: KL20 Summit 2024

That means diving headfirst into artificial intelligence (AI) and automation to amp up their game and keep up with the evolving needs of consumers.

2. It’s not so much about money moves anymore, but consumer behaviour.

Understanding consumer behaviour has always been important for businesses, but in the future, it will be paramount.

Fintech companies must pivot towards a consumer-centric approach, prioritising the needs and preferences of their clients, according to Presto Digital fund director Alan Soh.

“If you see, in the past five years, there has been a shift away from focusing solely on monetary transactions. It’s not just about money moves anymore; instead, it’s about getting inside consumers’ heads and using that insight to up your business game.”

“This change in focus underscores the importance of adapting to consumer behaviour and preferences rather than solely focusing on product features or monetary gains,” he said.

Alan also said that by tapping into data analytics, firms can gain valuable insights to tailor personalised solutions, driving customer satisfaction and loyalty.

3. There’s demand for fintech solutions that address cybersecurity too.

Cybersecurity’s shot straight to the top of the to-do list with the rise of cyber threats lurking about. Opportunities lie in wait for fintech solutions that can hunt down and help address these cyber threats.

“How do we gain access to vulnerable individuals, whether they are consumers, financial institutions, or even individuals within the same organisation?” Alan asked as a starting point.

Pesto digital fund director Alan Soh / Image Credit: KL20 Summit 2024

“Upon identifying potential vulnerabilities, such as those highlighted by the WIPO, where cybercriminals are known to target behavioural patterns within our systems, it becomes imperative to analyse environmental factors,” he said.

Alan’s solution for fintech success is to invest in robust security measures to safeguard sensitive data and protect against cyber attacks.

For example, implementing advanced authentication systems and staying vigilant against whatever threats the hackers have up their sleeves.

4. Digital assets and the tokenisation of real-world assets unlock more opportunities.

The emergence of digital assets and tokenisation of real-world assets is reshaping the financial landscape. 

Fintech firms are already leveraging blockchain technology to tokenise assets, providing individuals access to previously inaccessible investment opportunities.

Image Credit: KL20 Summit 2024

Through such solutions, Alan said, “Firms can reach underserved populations and provide them with essential banking services, thereby fostering economic empowerment and social inclusion.”

In short, this democratisation of finance fosters greater financial inclusion and accessibility. 

5. Collaboration and consolidation are drivers for growth and innovation.

According to B Capital founding general partner Kabir Narang, collaboration between fintech startups and established financial institutions can drive mutual growth and innovation.

But it’s not just about collaborations within the finance industry, it’s also about those outside of it.

“That’s a common trend we are seeing in cybersecurity, with mergers and acquisitions shaping the competitive landscape.”

He explained how companies like Apple, with their wide array of products and services, effectively manage financial transactions.

Kabir said this interconnectedness between technology and financial operations shows the close relationship between consumer spending and technological advancements.

Strategic partnerships can allow startups to leverage the resources and expertise of incumbents, while established players benefit from the agility and innovation of startups. It’s a win-win all around.

B Capital founding general partner Kabir Narang / Image Credit: KL20 Summit 2024

Tips for investors who want to ride the fintech wave

As Malaysia embraces the digital revolution, the opportunities for fintech companies and investors alike are boundless.

The fintech sector offers attractive investment prospects, especially in AI, cybersecurity, and digitalisation.

Despite the appeal, Alan advised investors to be savvy.

“While investing in public markets or equities typically requires time-consuming processes to gather information for company revaluation, in the blockchain space, you get data live,” he said.

He likened it to a company releasing daily financial reports, enabling investors to track volume trends, buyer behaviour, and transaction sizes instantly.

It becomes all the more important that investors must carefully evaluate projects, considering factors such as return on investment (ROI) potential, market trends, and regulatory landscapes.

Besides, it’s not just about throwing money around—it comes back to the point about collaboration, in which investors play an important role too.

  • Learn more about the KL20 Summit here.
  • Read other articles we’ve written about fintech here.

Featured Image Credit: KL20 Summit 2024

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Vulcan Post aims to be the knowledge hub of Singapore and Malaysia.

© 2021 GRVTY Media Pte. Ltd.
(UEN 201431998C.)