Fintech and the Transformation of the Islamic Finance Regulatory Framework in Malaysia

Abstract

The worldwide trend of Financial Technology (Fintech) reached the Malaysian shores in the past few years, making the observations and analysis of this subject more critical than ever. Furthermore, Fintech has developed to be an unavoidable area in the Islamic finance industry. Therefore, this chapter seeks to analyse the development of Fintech in the Islamic finance industry and its connection to Islamic economics, as well as the impact towards existing regulatory mechanisms. While the scarcity of studies on this area is apparent, the authors have identified the undebatable need to regulate the development of the Fintech industry and its effects while analysing the drawbacks and positive effects of Fintech towards parties involved in the Islamic finance industry. This chapter objectively studies the phenomenon of Islamic Fintech globally with emphasis on Malaysia through analytical research methods by utilising existing facts and findings on Fintech to make proposals for possible issues identified. Existing legal frameworks are studied and scrutinised to determine whether they can accommodate the rapidly evolving Fintech. The new Regulatory Sandbox by Malaysia’s central bank and existing laws are also examined. It is found that there is a room for improvement to the current regulatory framework.

Citation

Hui, H.W., Manaf, A.W.A. and Shakri, A.K. (2019), "Fintech and the Transformation of the Islamic Finance Regulatory Framework in Malaysia", Oseni, U.A., Hassan, M.K. and Hassan, R. (Ed.) Emerging Issues in Islamic Finance Law and Practice in Malaysia, Emerald Publishing Limited, Leeds, pp. 211-222. https://doi.org/10.1108/978-1-78973-545-120191018