KUALA LUMPUR, Oct 11 -- Industry players should be more aggressive in tapping into the enormous growth potential of Islamic Financial Technology (fintech) market in Malaysia despite being in its infancy stage.

According to the Economic Outlook 2020 report released by Finance Ministry today, the growth in Islamic fintech is supported by raising awareness among stakeholders and strong demand from customers as well as the facilitative regulatory environment in key Islamic financial markets.

"By embracing and embarking on Shariah-compliant digital innovations, new and greater opportunities will be available for industry players, therefore, industry players need to play an aggressive role in accelerating digital innovations.

"Ultimately, by leveraging Islamic fintech, Malaysia's aspiration of becoming a global Islamic Financial hub can be achieved through wide-ranging Shariah-compliant products and services offered to cater to the rapidly evolving market and customer demand," the report said.

It said the fintech driven by Industrial Revolution 4.0 (IR 4.0) is exponentially enhancing 20th-century financial services, operations business models and customer engagement.

Fintech entities are not financial institutions but utilise fintech in providing financial services such as lending, investment, payment, risk management, data analytics and wealth management.

Some of the activities include mobile payments, money transfer, trading platforms, crowdfunding and peer-to-peer (P2P) financing, and in the context of Islamic fintech, it said all these activities must be Shariah-compliant.

The advent of fintech makes Islamic finance more competitive and attractive to customers as it provides choices which are more aligned to individual needs.

It also attracts more customers by providing a wide range of products and services at a lower cost in a more efficient manner.

Furthermore, it said users will benefit from superior customer experience as Islamic fintech leverages the Internet, mobile devices, social media integration, big data analytics (BDA) and artificial intelligence (AI).

At the beginning of the Islamic fintech era in Malaysia, the crowdfunding platform was the first to be introduced to the marketplace.

In 2016, significant progress in Islamic fintech was achieved including the introduction of Investment Account Platform (IAP), Islamic Crowdfunding, Islamic FinTech Alliance (IFT Alliance) Islamic P2P financing and Islamic Robo-Advisor.

Several initiatives are being implemented to accelerate the growth of fintech in the country, including the issuance of a FinTech Regulatory Sandbox guideline as a reference document, and the introduction of Islamic Digital Economy (IDE) Guide by Malaysia Digital Economy Corporation (MDEC) to assist Islamic digital players by providing opportunities to scale up capacity and increase demand for their products and services.

-- BERNAMA