KUALA LUMPUR (July 29): Malaysian banks have been urged to move beyond collateral-based lending into funding innovation, services and ecosystem development to support the country’s next phase of growth.
As Bank Negara Malaysia (BNM) prepares the next medium-term plan for the financial sector, panellists at the Sasana Symposium 2026 on Wednesday said the focus should be on fostering a more collaborative relationship between regulators and industry, reduce fragmentation across the financial system and improve the flow of capital to sectors critical to Malaysia's long-term resilience.
"The question before us today is how can we do better going forward given the challenges in the new economy to ensure that capital will be channelled in the most efficient manner to the right sector that will enable more resilient and better financial inclusion for the country as a whole," said Datuk Abdul Rauf Rashid, country managing partner for Ernst & Young.
BNM is now in the midst of drafting the Financial Sector Blueprint 2027-2030 that the central bank has said will prioritise financing a more resilient and prosperous society as well as future-proofing Malaysia’s financial system.
The services sector accounts for more than half of Malaysia’s economic output and private sector jobs.
However, businesses in the sector, including information technology, logistics and projects that improve connectivity, remained underfunded because they often lacked collateral despite their importance, according to the Malaysian International Chamber of Commerce and Industry vice president Datuk Azman Shah Mohd Yusof.
He argued that banks should evaluate entire supply chains and business ecosystems, particularly in sectors such as manufacturing, logistics and trade, where operational efficiency and connectivity generate wider economic benefits.
"Don't look at a company asking for finance to build a warehouse as a property play. Don't look at a port operator wanting to raise sukuk for their key cranes as a piece of infrastructure," said Azman Shah. "Look at it in terms of the totality, the function of the value chain, because when you understand that and when you have an inkling of the multiplier effect to the economy, then you see how important it is."
The next blueprint should address Malaysia’s underfinanced industries that operate in higher-risk, innovation-driven sectors, said Tengku Datuk Seri Azmil Zahruddin Raja Abdul Aziz, chairman of the country’s biggest telecom company CelcomDigi Bhd (KL:CDB).
“Look at the largest 30 companies on the stock exchange today versus 10 years ago, 20 years ago, [they are] by and large the same companies. If you look at the US, the largest companies today, actually, most of them didn't exist 10 years ago,” Azmil said.
That makes it crucial for Malaysia to reinvent its financing models that now rely heavily on collateral and credit history, often ill-suited for startups and newer businesses. While fintech firms have begun using alternative methods to assess borrowers, banks have generally been slower, he said.
Larger banks, with stronger capital buffers, were better placed to experiment with new lending models, provided the risks were properly ring-fenced, Azmil noted.
BNM director of the financial development and innovation department Harizal Alias, moderator of the plenary session, said the central bank had been engaging businesses, financial institutions and the public to identify financing gaps and shape the next blueprint.
He said the central bank had also begun sectoral financing engagements to better understand financing challenges in areas such as intellectual property and ecosystem-based industries. Abdul Rauf said financial institutions should also embrace a broader purpose beyond shareholder returns.
"When an organisation embraces a bigger purpose, for example, in nation building, then they will see a longer-term benefit that will enable a more resilient and a more sustainable financial operation," he added.