One of Malaysia’s leading Islamic banks, Bank Islam Malaysia, is charging ahead as a value-based intermediary to create a platform-based solution so more people can have access to Shariah-compliant products, which are based on risk-sharing and fairness.

The bank, through its new division, Centre of Digital Experience (CDX), has been actively laying the foundation to set up a 100% digital bank built on a flexible platform that allows fintechs, digital marketplaces and other strategic partners to plug in directly.

In the course of setting up the digital bank, two infrastructure partners – Mambu, a software-as-a-service (SaaS) banking platform, and Experian, a global information services company – have been selected to develop new product offerings, along with Pod, a local fintech player, who has signed a memorandum of understanding to join in.

This digital-first approach, announced on March 7, would see Bank Islam applying next-generation technology, such as cloud native digital banking and the electronic know-your-customer (eKYC), to its products and services, enabling branchless propositions for greater accessibility to technology-savvy customers.

The engagement of Mambu allows the bank to configure Shariah-compliant banking products, while Experian will provide the eKYC solution that enables customers to open a bank account without having to step into a bank branch.

On the product front, CDX is in the midst of developing an alternative credit scoring model in collaboration with Pod. Together, CDX and Pod will explore solutions for customers who are generally overlooked by financial institutions, such as gig workers. This will be done by identifying alternative ways, beyond traditional means, of assessing the credit worthiness of customers and thereby enabling flexibility and inclusion in the formal banking system for this customer segment.

In forging strategic partnerships with Mambu, Experian and Pod, Bank Islam is confident, according to its CEO Mohd Muazzam Mohamed, that it can provide greater accessibility to the market by capitalizing on digital technologies. At the same time, this effort will further spur the digital transformation of the financial sector, especially in the Islamic banking industry.

“With Bank Islam’s expertise in risk management and Shariah-related matters, coupled with Pod's technology and Mambu’s agile SaaS banking platform, the partnership is able to introduce and promote Islamic financial solutions to the targeted segment,” Mohd adds. “We also believe that this partnership will serve as a precedent to encourage more fintech collaborations with financial institutions and, ultimately, contribute to the growth of our digital economy.”

Underserved customers, including gig workers, says Nadia Ismadi, Pod’s co-founder and CEO, are struggling to save money and have access to financing and consumer financial products, even more so after the pandemic. “Pod exists because we believe the job market as we know it is changing, and soon the majority of the workforce will fall into the informal sector,” she adds. “Thus, it is important that we lay the basic building blocks to deep dive into their financial needs in order to service these segments.”

The CDX solution is expected to be out in the second quarter of 2021.