Islamic banking’s next hurdle in Malaysia is insight, not infrastructure
Executives warn that simply digitizing products is no longer enough to meet expectations of younger, tech-savvy consumers
KUALA LUMPUR, Malaysia (MNTV) — Digital maturity in Malaysia’s Islamic banking sector sits somewhere between four and seven, but industry leaders agree the next leap will be far harder to achieve, reports FINTECH News Malaysia.
Digital maturity is how advanced a bank is at using digital tech, data, and new ways of working to serve customers.
Dafinah Ahmed Hilmi, CEO of HLB Islamic, rated Malaysian Islamic banking’s digital maturity at 6.5, but was quick to reframe what the number actually measures.
For her, the more useful question is not how digitally capable Islamic banks are today, but how ready they are to use that capability to capture what comes next. The foundation, she shares, is largely in place.
The niche framing no longer applies. Rather, she adds, the gap lies in the data. Banks and non-banks alike are sitting on customer information that could drive meaningful segmentation, but few are using it with enough precision to understand what different customer segments actually need, and to build products around those needs rather than around product categories.
“Islamic banks today are really playing catch-up to conventional banks by design. But Islamic finance is already mainstream. The question now is: how do we differentiate? By understanding the Shariah nuances, the risk-sharing structures, ethical investments, and really elevating the social status of the community,” said Dafinah.
Aizuddin Danian, Chief Personal Banking Officer at AEON Bank, sits at the optimistic end of the range at seven-and-a-half, and for different reasons.
He said that while the journey from zero to 7.5 had taken the industry more than forty years, the leap from 7.5 to 9 was going to arrive much faster as the platforms, talent, and customer appetite were finally in place.
“For a bank like AEON, we’ve got a timer, and we need to graduate in five years. Otherwise, we risk having the license being taken back. We only have three and a half years left. That means that we have to do so much in the next three years, and our reliance on cloud-based services is going to get us there,” said Aizuddin.
Chirag Amla, Principal Solutions Architect for APAC at Mambu, put the number closer to four or four and a half, and was direct as to why. “Banks need to understand how the younger generation is thinking, how they interact with other services, and bring that into banking, rather than taking a product, putting it in a shiny box, calling it digital, and handing it over,” said Chiragh.
True digital maturity means building with the next five to ten years in mind, and that requires understanding beyond what customers want today and going towards how the next generation relates to money, faith, and the services woven into their daily lives. That generational dimension, Chiragh suggested, is where the more interesting pressure is building.
Malaysia’s younger Muslims are moving closer to their faith, and they increasingly want that reflected in how they bank, not as a product category, but as something embedded in how they live.
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