A shift towards digitalization has spurred the Islamic banking industry’s growth. In 2021, Malaysia allocated two of its five digital banking licences to digital Islamic banks. Seah Li Yun, EY Asean banking and capital markets leader, said that Islamic fintechs are seeing rapid growth and opportunities in Southeast Asia, particularly in Malaysia and Indonesia, with untapped potential in areas such as sustainable and responsible investing. Seah expects the successful applicants of the Islamic digital licences in Malaysia will accelerate the expansion of the Islamic social finance offerings in the country, as they focus on their offerings in the fintech and sustainability space. Outside of Malaysia and Indonesia, innovations in the banking sector may also spur interest in Islamic financing. Demand for Islamic banking is on an upward trend globally, particularly in Southeast Asia.
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