Although its fintech industry is still relatively nascent compared to major players like London, the Malaysian capital of Kuala Lumpur climbed 11 places in this year’s Global Fintech Rankings. There is no shortage of homegrown success stories. Among them is Jirnexu, which provides digital acquisition solutions for financial service providers and has raised US$37 million to date. In January, supply chain finance startup and P2P financing platform CapBay bagged US$20 million in a Series A fundraise.
Malaysia’s consumers are spoilt for choice when it comes to e-wallet providers with a number of major players as listed by Jobstreet, such as GrabPay, CIMB Pay, AEON Wallet, Boost, and Touch ‘n Go. Cashless transaction has taken on an increasingly prominent role in people’s lives, so much so that the active user base for the e-payment system used for expressway tolls has ballooned to 21 million people. In fact, Malaysia boasts an ASEAN-leading digital wallet usage rate of 40%, ahead of neighbours like the Philippines (36%), Thailand (27%), and Singapore (26%). Cash usage has correspondingly dropped by 64% since the beginning of the pandemic.
These statistics are all reflective of the country’s thriving digital market. With more consumers prioritising convenience and hygiene, they naturally turned towards contactless methods like e-wallets and digital banking. These developments have also manifested in the overall growth and expansion of these fintech companies. For example, AIA Malaysia recently purchased a minority share in Touch ‘n Go, putting their value at RM 3 billion. On the other hand, Boost recently teamed up with RHB Banking Group, signalling their move into the highest-margin segments of financial services.
The recent pandemic has accelerated this growth, enabling the market to adopt fintech solutions at a much faster and larger rate. According to the Fintech Malaysia 2021 report, mobile banking transactions reached a record high of US$109.7 million in 2020, an increase of 125% compared to the year before. Unprecedented nationwide lockdowns have forced people to work from home, pushed businesses online, and encouraged the use of digital payments. All these have spurred Malaysian fintechs to shine amidst the challenges.
The growth of Malaysia’s fintech ecosystem is also partly thanks to regulatory support from both Bank Negara Malaysia (Malaysia Central Bank) & the Securities Commission. To support the efforts of regulators, the Malaysia Digital Economy Corporation (MDEC) has launched the Fintech Booster which is a capacity building program, in collaboration with Bank Negara Malaysia to assist fintech companies, both local and foreign in developing their products and services via three strategically crafted modules; Legal & Compliance, Business Model, and Technology.
Malaysia fintechs going global
Among the companies that have benefitted from MDEC’s programmes is Soft Space, which provides fintech infrastructure services for the financial services industry (FSI). It delivers these solutions via a “fintech-as-a-service model”, allowing FSIs to pay only according to their usage demand. Specifically, they help FSIs accept payments and issue physical white label prepaid cards via e-wallets.
One of Soft Space’s innovation is the “Tap to Phone” introduced with PayNet back in 2018. The solution, a world’s first, is a gamechanger to the payment landscape by allowing any Android device with near-field communications to accept contactless cards.
Tap to Phone has been endorsed by major card schemes like Visa, Mastercard, JCB, and most recently UnionPay International. It is also used by clients in Australia, Europe, and Japan where, JCB, one of the largest card brands with over 140 million cards in circulation, has introduced this payment technology to its member banks across 24 countries.
“Soft Space has already introduced this technology to 13 FSIs and 8 partners globally, some of which are unicorn payment giants that have the most stringent business and security requirements,” said chief strategy officer Chris Leong.
Soft Space has also ventured into the transport and logistic sector in two advanced markets. In Japan, Tap to Phone is the first in the market to enable expressway buses to accept contactless credit cards. Meanwhile, in Australia, it is used by Transport for New South Wales to validate payments. This is a further testament to Soft Space’s capabilities.
The fintech has also successfully expanded to other overseas markets, including Taiwan, Australia, Japan, Thailand, Singapore, and Indonesia.
Soft Space has managed to hit these key milestones because of the rich Malaysian fintech ecosystem and the support of the government. The country’s central bank, for instance, actively emphasises the need for Malaysia’s regulations to be aligned with global standards, which ensures that local fintech companies are always well-positioned to go global.
But Soft Space isn’t alone in this feat. Joining them among the roster of Malaysian fintechs that have gone global are Tranglo, JurisTech, and Merchantrade.
More local players scaling globally
Tranglo is a fintech that specialises in cross-border payments. They provide three solutions: Tranglo Connect, Tranglo Business, and Tranglo Recharge, which respectively provide remittance payouts, payouts for businesses without money service business licences, and international airtime transfers.
Recently, US fintech giant Ripple announced that it would be acquiring a 40% stake in Tranglo. With this partnership, Tranglo is ready for its next stage of growth.
“This acquisition supercharges Tranglo’s capabilities to include digital currency as settlement and blockchain technology to speed up and secure transactions further,” said chief executive officer Jacky Lee.
Despite challenges like regulatory differences and language barriers, Malaysia’s multilingual and multicultural uniqueness has enabled Tranglo to thrive abroad. It currently has a presence in more than 22 countries, such as the Philippines, China, Indonesia, Vietnam, and the United Kingdom.
JurisTech, which develops a variety of fintech solutions for different client classes, is also among Malaysia’s success stories. It offers credit management software solutions for banks and financial institutions. Furthermore, it provides “software-as-a-service” products for small and medium-sized enterprises and customised marketing solutions via its consumer’s arm, iMoney.
The company created a machine learning tool, Juris Mindcraft, that does prescriptive analytics artificial intelligence (AI). It helps businesses make better decisions through the analysis of raw data in addition to providing business recommendations. Furthermore, they also introduced Juris Access, a digital onboarding platform, for organisations to deliver an easy to navigate, interactive digital space that streamlines the customer journey from the front-end to the back-end.
JurisTech has expanded globally to Australia, Uganda, Singapore, and United Arab Emirates (UAE). As the financial industry matures to transform digitally, JurisTech already has ready-built components and solutions for banks, financial institutions, Fintechs, and SMEs to help compose this future digitally.
Another promising player in the fintech ecosystem is Merchantrade. The company provides multiple fintech solutions such as the Merchantrade Money eWallet, which includes a visa prepaid card, remittance app eRemit, and payment gateway service Ozopay.
Today, Merchantrade is one of the largest remittance providers in Southeast Asia, with more than 100 payout partners including more than 40 banks worldwide. Partners from places as far as Europe, Canada, Oman, and Bangladesh can also access their international money transfer operator platform.
Soft Space, Tranglo, JurisTech, and Merchantrade will all feature at the forthcoming Malaysia Tech Month Fintech Showcase, a curation of the country’s top fintech companies.
To learn more about the programme and the fintech showcase, please visit the Malaysia Tech Month official page.
This article is produced by the e27 team, sponsored by MDEC
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