This article first appeared in Digital Edge, The Edge Malaysia Weekly on November 8, 2021 - November 14, 2021

At the start of 2020, Shree (not her real name), who hails from a small town, was ecstatic to have secured her first job in the big city. To her, this meant job stability and a steady income that would fund her outgoing lifestyle as a young working professional.

Her aspirations took a plunge, however, when the pandemic hit. As her role was not in the essential services sector, her working hours were reduced and so was her salary. With no prior planning and barely any savings in her bank account, Shree was at a loss — how was she going to survive on her own as her finances began to dwindle?

Shree is not alone in her predicament, as close to 100,000 Malaysians lost their jobs and livelihoods in 2020 alone, as reported by the Social Security Organisation (Socso). This downturn brought to light the lack of financial planning and literacy among Malaysians, which at the height of movement restrictions in 2021 gave rise to the white flag campaign for households unable to afford even essentials.

Recently, RinggitPlus’ Malaysian Financial Literacy Survey 2021 found that 56% of Malaysians either saved or were unable to save less than RM500 a month, while 52% would not be able to survive more than three months if they lost their job. Beyond the financial challenges, the pandemic has also inevitably led to a decline in mental health, according to a study by Malaysia’s Credit Counselling and Debt Management Agency (AKPK) in August 2021.

In its findings, financial stress had increased by 35% this year, with 65% of Malaysians believing that this had affected their job performance and a further 41% admitting that it had taken a toll on their mental health.

Addressing the financial literacy gap via technology to improve financial stability among those who lost their incomes during the pandemic, the government introduced various fiscal measures such as stimulus packages, wage subsidies and cash handouts to help the rakyat stay afloat.

For a greater, longer-term impact, however, there is a need to improve the levels of financial literacy among Malaysians. Leveraging financial technology to address specific pain points provides an accessible measure to help Malaysians increase their financial capabilities to help them safeguard against future crises.

With the Malaysia Digital Economy Corporation (MDEC) anticipating a 20% growth in e-commerce contribution to the digital economy this year, fintech solutions have become an important way to promote inclusive and sustainable support for individuals and communities.

Mobile e-wallets, for example, saw a resurgence, with market survey leader Oppotus reporting that, in the third quarter of 2020, 60% of Malaysians had used an e-wallet, more than double the 27% in the corresponding quarter the year before.

Aside from e-wallets and mobile payments, fintech can also be tailored to address other pain points such as solutions that raise awareness and offer guidance to help individuals better manage their finances.

Fintech can also revolutionise how employers offer compensation and benefit plans for today’s workforce, enabling them to support employees to gain financial control, which leads to better mental health and performance.

One way in which fintech can empower employees to gain better control over their finances is on-demand payment solutions that can offer flexibility as to when and how much an individual can access and utilise their salary.

As founder and CEO of PayActiv Safwan Shah said in a recent TEDx Talk, the pandemic revealed the urgent need to address financial stress in those living from paycheque to paycheque, and how paying employees on time will help them thrive.

By portioning salary payments during the month, individuals can budget their needs, which can help improve their spending and saving habits and reduce reliance on additional loans during emergencies.

This also provides an opportunity for employers to play a role in improving financial well-being among their employees through flexible compensation and benefits and, in the longer-term, reduce financial stress among their talents, helping to boost workplace morale.

Bright Plan’s 2021 Wellness Barometer Survey shows that financial stress can cost employers an astounding US$4.7 billion (RM19.5 billion) in losses a week, as well as at least 15 hours of lost productivity.

Employees also often seek help when it comes to managing personal finances, as seen in the 87% who shared this sentiment in the PwC Employee Financial Wellness Survey. Coupled with this, fintech tools that enable individuals to assess their own financial health, and then offer initial recommendations to help them make improvements via easily accessible apps or websites, can encourage individuals to take charge of their financial wellbeing.

The RinggitPlus Malaysian Financial Literacy Survey 2021 reported that at least 85% of Malaysians think their EPF savings may not be enough for retirement. Among youths and young adults such as Shree, overspending with no foresight is also an issue — 45% spend exactly or more than what they earn, and 55% have yet to give any thought to retirement planning.

As the need for financial planning and literacy grows more prevalent in the post-pandemic era, fintech can play a more significant role beyond e-commerce and online banking to empower individuals like Shree to become more financially savvy.

Through such solutions, Malaysians from all backgrounds and financial standing can gain better insights into their habits and rebuild their financial stability, even as Malaysia bounces back from these challenging two years.

Andrew Tan is the CEO of kipleX Sdn Bhd, an early-stage venture capital fund and start-up studio based in Kuala Lumpur

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.