Development of Fintech And Its Potential Impact on Islamic Banking In Brunei Darussalam And Malaysia

Abstract

The main objective of this research is to study and investigate the potential impact of fintech on the Islamic banking and finance industry in Brunei Darussalam and Malaysia. This research deals with the qualitative method vis a vis an exploratory method with the literature review to accomplish and fulfill the research objectives.Content analysis and Semi-structured interview was employed throughout the research. The NVivo 11, Computer-Assisted Qualitative Data Analysis Software (CAQDAS) is used in this research to analyze and interpret the data. Findings clearly show that Fintech have great potential impact on Islamic finance industry in Brunei Darussalam and Malaysia. Both countries are the pioneers in taking initiatives regarding Fintech. The sectors which can be disrupted due to Fintech are payment sector, consumer banking, crowdfunding and Insuretech. The technologies like Blockchain, smart contracts , artificial intelligence (AI), robo advisors, Internet of Things (IOT's) and cloud computing have great potential on Islamic finance industry. Islamic Financial institutions have to deploy these technologies. Islamic financial institutions can promote financial inclusion through Fintech. Fintech poses opportunities for Islamic finance industry. Fintech offers user friendly, timely and affordable services and products and develop better customer experience. Collaboration model is a most suitable option for both traditional financial institutions and Fintech. Islamic financial institutions in Brunei Darussalam and Malaysia should embrace Fintech and find solutions and new business models through Fintech. This study is a mile stone and unique in a sense it provides a comprehensive overview and importance of an emerging industry i.e. Fintech and investigate the potential impact on Islamic financial industry in Brunei Darussalam and Malaysia. This research also proposes feasible strategies for Islamic financial institution to remain competitive and sustainable in the era of technological revolution and Fintech.