Malaysia: The Hong Leong Islamic Bank Approach Towards Modernising Islamic Banking

Johanan Devanesan -Fintechnews

In an era where technology is challenging and reshaping the contours of Syariah-compliant industries as well as the sectors financing them, Hong Leong Islamic Bank has been on what could turn out to be a pivotal journey of digital transformation.

On this path, Hong Leong Islamic Bank has been guided in recent months by Dafinah Ahmed Hilmi, its Chief Executive Officer since mid-2023.

According to the CEO, the bank’s foray into digitalisation is not merely about adopting new technologies; at its core, it’s a concerted effort to align with the evolving demands of customers, promote financial literacy, and provide end-to-end solutions for customers navigating the halal industry.

Under the leadership of Dafinah, the bank has embarked on a journey to leverage technology and strategic partnerships to better serve its customers and communities.

Fintech News Malaysia delves into the bank’s digital initiatives, its tailored strategies for individual and SME customers, the insights gathered from Dafinah’s experience in Islamic banking, and a broader perspective on the future direction of digital transformation in Islamic finance.

Hong Leong Islamic Bank Supports SMEs in the Halal Ecosystem

Since March 2024, the centre of Hong Leong Islamic Bank’s digitalisation narrative for SMEs has been the BizHalal programme, a forward-looking endeavour designed to bolster small and medium enterprises (SMEs) operating within Malaysia’s burgeoning halal ecosystem.

The BizHalal program, in collaboration with the Halal Development Corporation (HDC), offers Shariah-compliant financing complemented by halal advisory support from HDC and in-house halal industry specialists at Hong Leong Islamic Bank, to be offered synergistically within the broader ecosystem of parent Hong Leong Bank Berhad’s suite of banking services.

Hong Leong Islamic Bank Pivots Customers, SMEs Towards Modernised Islamic Banking

HLISB CEO Dafinah Ahmed Hilmi (center right) and HDC Chairman Khairul Azwan Harun (center left) showing their signed MoUs to work together on the BizHalal programme

Central to this cooperation will be digital solutions like the HDC’s Halal Integrated Platform (HIP), an online service for managing the entire halal application journey efficiently.

HIP is intended to smoothen the process of applying for halal certification, which can be an unknown entity for businesses from non-Islamic backgrounds, or even for micro and small Islamic traders who find approaching traditional banks to be daunting.

Obtaining halal certification for small businesses in Malaysia involves navigating intricate regulatory requirements, rigorous documentation, and compliance with stringent food safety and religious standards.

Dafinah explained the rationale behind BizHalal, and how it is intended to support government agency HDC’s directive to financially include halal-oriented small businesses:

“We need to play a part in terms of working within the ecosystem. Coming back to our collaboration with HDC, they are entrusted to drive halal development as part of our push for GDP and economic growth.

Where the banks come in, particularly with BizHalal, is that we have our own in-house specialists to advise clients on their journey of becoming halal certified, even before they come for financing.”

This value-added advisory service helps businesses navigate the challenges and costs associated with obtaining halal certification. Hong Leong Islamic Bank’s ultimate goal is to support these SMEs in becoming exporters and moving up the value chain, not just within Malaysia but also on a global scale.

By equipping SMEs with the necessary knowledge, resources, and financial support, Hong Leong Islamic Bank is paving the way for these businesses to expand their reach and tap into new markets.

As Dafinah notes, “Our collaboration[…] is to drive halal development, which is part of our growth strategy,” highlighting the strategic intent in nurturing individual and business growth beyond conventional banking services.