15th December 2020

Financial services empowered by digital innovation and payment options like E-wallets have become quite prevalent in Malaysia. Fintech (and working with a fintech company) has become a part of the new normal. The immediate, 24/7 access to financial services on-the-go is becoming more and more dominant. Fuel has been applied to its growth by Covid-19. Since it addresses consumers' expectations for fast, on-the-go transactions, fintech has created pockets of possibilities for buyers and sellers to get their needs met from the comfort of their homes.

Small and medium-sized enterprises (SMEs) are encouraged globally (through government policies) to embrace a more diverse approach to finance.

In light of this, there are now different creative financial solutions that employers can use in Malaysia.

Fintech's rise in Malaysia

According to a recent survey released by CPA Australia, more than 75% of Malaysia-based companies have been using at least 1 fintech-related product or service since 2019.

Mobile payments or digital and online wallets were the country's most commonly accepted fintech products in 2019. Approximately 60% of businesses surveyed by an accounting firm, CPA Australia, said they were utilizing digital wallets and sending money from online wallets.

In nearly all aspects of their daily lives, Malaysian consumers are now increasingly embracing the digital lifestyle. This imminent shift in customer behavior pushed banks to quickly digitalize their company operations. Banks had to digitalize their frontend as well as backend IT systems rapidly to meet the demands of today's customers to remain competitive and relevant.

Bank executives are often questioned in discussions about how they can seamlessly convert their internal IT technology legacy to the new and advanced business/operation models that will allow them to outsource some of the non - essential IT platforms and processes.

Most facets of the global banking and financial sector ecosystem are now embracing digital transformation to boost the experience of their customers and to stay important to the competitive edge. As Malaysia is part of the global economy, these changing developments are also catching up rapidly.

If you run a fintech company or SME in Malaysia, here are several fintech solutions to take note of:

Salary management systems

Many would probably agree that payroll is no easy task, particularly if your company is still hanging on to outdated financial infrastructure. Salary management system solutions are now available. These offer features to help business owners reinforce operational flexibility, financial accessibility, and convenience.

There are even salary management system providers that use digital wallets for the benefit of their employees. Crediting salaries, for example, can be made easier today, and innovative connectivity means that the global workforce stands to benefit.

Employers that hire migrants and foreign employees that work in local workplaces often have problems with various payment processes, but now e-Remittance integration via e-wallets and cross-border payment capabilities are making it easy to send money to and from different countries and across different borders and regions. Transactions related to payment are efficient and faster, which means that employers can worry less.

Digital wallets

Using digital money, a digital wallet (also known as an e-wallet) enables you to make electronic financial transactions.

You can use it with your mobile to either enable in-store purchases or to shop online. And a digital wallet offers safe, cashless convenience all in one location with the capacity to store loyalty card details and rewards you've received from specific outlets.

The revolution of the digital wallet is here. It just took clients and companies a little bit longer to accept this technology. This is due to safety issues and the small number of suitable suppliers.

Digital wallets are simple to introduce, can accelerate the process of checkout, and could save you cash on processing fees. Employers are quickly beginning to realize the power of the e-wallet, and its ability to optimize digital payments as well as fortify overall financial operations for businesses all around the world.

Digital wallets can help employers attain that aim in a society where customer service means so much. During the checkout phase, digital wallets take out a few of the steps involved and can save people time. When it comes to digital wallets, privacy is arguably one of the greatest hurdles to be solved. However, the fact is that they're actually more secure and biometric identification (including the use of fingerprint recognition) can also be used to validate a purchase. Digital wallets are on the way to becoming essential components of optimized digital infrastructures for businesses and consumers across the globe.

Payment Gateways

We’ve all probably used a payment gateway at least once by now. Payment gateways have become incredibly vital for enterprises around the world striving to increase their financial stability. This is particularly true in recent times, with the ongoing pandemic and the resulting urgency for digital adoption and e-commerce.

IIn simpler words, the online counterpart of a point of sale (POS) scheme in a physical store is a payment gateway. A payment gateway enables e-commerce transactions in the very same way that a POS device transmits to a payment processor the credit or debit card data of a customer. Instead of a physical computer, payment gateways are software programs that transmit payment card transactions securely from the website of the merchant to the authorized payment processor.

Credit cards and automated clearing houses are the two most popular kinds of payment gateways. Payment gateways offer amazing benefits for those looking to maximize their online sales. For one, they halve the waiting time for companies to pay. Invoices submitted with these payment options are paid much earlier.

A recurring payment portal helps to simplify the purchase process and boost revenue for site owners who offer subscription-based goods or services. There are also payment gateways that can be set up to view client credit cards at different times, such as weekly, monthly, or bi-weekly.

Business owners should also consider incorporating several payment gateways into their channels. This can be safer, more professional, and more convenient for customers.

When it comes to payment systems, safety should be a priority. After all, the gateway's primary job is to encrypt and safely pass client data. However, aside from sending data safely, offering customers different payment gateways can make them feel better about using your platform.

17 percent of shoppers cancel transactions because they don't feel comfortable using their credit cards on that platform, a survey from Baymard University reported. Offering several payment methods can eliminate this problem. In contrast to shops with one or two choices, online shoppers feel more comfortable purchasing from a site with more payment options. The outcome suggests an increase in confidence.

Peer-to-peer lending

P2P (Peer-to-Peer) loans are one of the world's fastest-growing fintech (Financial Technology) networks that have gained a lot of traction. In Malaysia, where many businesses and small companies have already benefited, the circumstance is the same.

Many banks feel that, due to a lack of collateral, lending to SMEs is excessively risky, therefore the average rejection rate is 20 percent.

The inability to obtain loans from banks limits the growth of these businesses, which in turn influences the development of the economy of the country. Given the importance of small and medium-sized enterprises to the Malaysian economy, the government has launched a range of initiatives to expand access to credit for small and medium-sized enterprises, including a peer-to-peer (P2P) financing system that was implemented in 2016, making Malaysia the first country to regulate the sector in Southeast Asia.

Invoice payment solutions

Recent research shows that small and medium-sized enterprises in Malaysia have had to wait for 50 percent longer to receive their invoice payments, particularly compared to just a few years ago. The money does not always flow back smoothly when large corporations are supplied by SMEs, mostly due to bureaucracy and procedures that big companies have to go through before the money can be used. Without adequate cash flow to continue to cover the costs, a supply-based SME could indeed be forced to borrow from financial institutions. Capital Bay is a startup that attempts to address the cash flow problem facing many startups and SMEs, seeking to provide solutions using four basic steps; supplier invoices are submitted online automatically, users select a date to collect their invoice payment, buyers, as well as funders, approve early payment, and users receive early payment. For SMEs, this supply chain financing innovation is made more accessible and quicker by using their customers ' credit power to financing rates that are much lower than those of a conventional bank.

Cross-border remittance

In recent years, e-commerce in Malaysia has grown rapidly, start-ups and businesses are increasingly concentrating on cross-border payments as well as supply chain solutions, and are enjoying rising market gains.

The Digital Free Trade Zone (DFTZ), an e-commerce network designed to promote exports to small and medium-sized enterprises in Malaysia, speeds up e-compliance activities and trade facilitation initiatives.

As a result, ASEAN cross-border trade is growing and demand for international payments and shipping continues to grow. Fintech firms are developing creative cross-border remittance solutions, providing individuals and SMEs with more advantages and affordable prices.

With 40 percent of online cross-border purchases, Malaysian online shoppers are reasonably open to cross-border shopping.

EVOLET is a digital wallet app for migrant workers.

Learn more at https://evolet.io/