Comparing Malaysia and Indonesia in Adopting AI, Fintech, and Blockchain
Comparing Malaysia and Indonesia in Adopting AI, Fintech, and Blockchain
Amarjit Singh
Comparing Malaysia & Indonesia in
Adopting AI, Fintech, and Blockchain
As digital transformation accelerates worldwide, Southeast Asia is positioning itself as a key region for adopting technologies such as AI, Fintech, and blockchain.
“When is Malaysia going to speed up the adoption of emerging technologies?”
According to Bank Negara Malaysia (BNM), the Malaysian economy grew by 5.9% in the second quarter of 2024. This growth was fueled by stronger domestic demand and continued export expansion. Household expenditure also rose, supported by favorable labor market conditions and increased policy measures.
While Malaysia’s economic growth is reflected in the reported percentages, the question remains whether this progress is mirrored in the adoption of emerging technologies.
To explore this further, we compared Malaysia and Indonesia across four key areas: blockchain implementation, AI integration, fintech development, and decentralization (as illustrated in the chart below).
| Technology | Malaysia | Indonesia |
|---|---|---|
| Blockchain Adoption | Moderate adoption | Higher growth and usage in fintech and logistics |
| AI Integration | Emerging in business | Strong government-backed AI initiatives |
| Fintech Growth | Steady, focused on banking and payments | Rapid growth in digital banking and financial inclusion |
| Decentralization | Exploring potential | Active development, especially in fintech solutions |
Source: Digital News Asia
Although Malaysia’s economy is expanding, there is still significant room for improvement when it comes to the adoption of AI, blockchain, and fintech technologies.
Blockchain Adoption
Blockchain in Malaysia
Malaysia’s Blockchain Ecosystem Malaysia has made notable progress in adopting blockchain technology. With government support and established regulatory frameworks, blockchain is being evaluated for application across a range of sectors, including finance, logistics, and healthcare.
The Securities Commission Malaysia has adopted blockchain to regulate digital assets, promoting growth in decentralized finance (DeFi) while ensuring compliance with financial laws. Luno, a leading and regulated cryptocurrency exchange, has gained considerable traction since its entry into the Malaysian market in 2019.
Headquartered in the UK, Luno operates as a Recognized Market Operator (RMO) with approval from the Securities Commission Malaysia (SCM). As of 2023, Luno has not disclosed the exact number of users in Malaysia, but its strong presence suggests a substantial user base.
Additionally, the country has several platforms advancing toward decentralization:
MyEtherWallet
A popular Ethereum wallet for managing digital currencies and using decentralized applications (dApps).
Tokenomy
A platform that facilitates tokenization & fundraising, enabling businesses to raise capital through token sales.
Xfers
A payment gateway & remittance service utilizing blockchain for secure & efficient transactions.
These platforms are just a few examples of blockchain-enabled services in Malaysia, with many others offering similar products.
Blockchain in Indonesia
Indonesia’s Blockchain Development Indonesia’s burgeoning fintech industry is also making headway in blockchain adoption. The Indonesian government has demonstrated interest in blockchain’s potential, particularly in sectors like logistics and agriculture, where blockchain is being explored to enhance transparency and financial inclusion through cryptocurrency platforms.
Key players in Indonesia’s blockchain scene include:
Indonesian Coffee Traders Association (ICTA)
Partnering with IBM to create a blockchain platform for tracking coffee bean origin & quality.
PT Bank Rakyat Indonesia (BRI)
Implemented a blockchain system for palm oil traceability to ensure sustainable sourcing.
PT Telkom Indonesia
Created a blockchain platform for supply chain management in the telecommunications sector.
PT Astra International
Exploring blockchain technology for supply chain optimization across multiple industries.
In 2021, the Indonesian Commodity Futures Trading Regulatory Agency (BAPPEBTI) introduced regulations for cryptocurrency exchanges, marking a significant milestone for Indonesia’s blockchain ecosystem.
AI Adoption
AI in Malaysia
Malaysia’s Focus on AI Malaysia has demonstrated a strong commitment to advancing artificial intelligence. In 2021, the country introduced its National AI Roadmap, aimed at integrating AI across key sectors such as healthcare, finance, manufacturing, and public services.
Major projects like the AI in Manufacturing (AIIM) initiative have helped businesses improve operations through AI-driven insights. Additionally, Malaysia has a growing number of AI startups and well-established university-led AI research programs.
Some notable examples include:
Inceput
Focused on computer vision & image recognition technologies.
Deepen AI
Specializing in deep learning applications across various sectors.
Sentient AI
Specializing in natural language processing and machine learning.
Walnut AI
Providing AI-powered solutions for customer service and sales.
AIDA Technology
Developing innovative AI tools for the healthcare industry.
Aerodyne is another Malaysian company leading AI innovation by using AI for advanced analytics and operational efficiency.
Indonesia’s AI Progress Although slightly behind Malaysia, Indonesia has made significant strides in AI development. AI is being employed in sectors like retail, healthcare, and finance to drive growth. The Indonesian government’s AI initiatives aim to improve public services and education, which have accelerated due to the pandemic.
AI is also crucial in Indonesia’s fintech space, with companies like Gojek, the country’s leading super app, using AI to enhance customer experience and drive personalization. Indonesia’s AI applications in fintech are poised to support the nation’s rapidly growing digital economy.
AI in Indonesia
Indonesia, although lagging slightly behind Malaysia, has been making considerable progress in AI. The country is harnessing AI to improve various sectors, including retail, healthcare, and finance.
Indonesia’s government-backed AI initiatives aim to enhance public services and education, which have gained momentum due to the pandemic.
AI is also playing a critical role in Indonesia’s Fintech sector. Companies like Gojek, Indonesia’s leading super app, are using AI to improve customer experience and drive personalization.
Indonesia’s focus on AI applications in financial technology shows immense promise, particularly as it seeks to support its rapidly growing digital economy.
Fintech Growth
“Malaysia’s Fintech Ecosystem”
According to Fintech News Network, there were over 300 fintech companies registered in Malaysia as of 2023.
Malaysia’s Fintech Landscape 2024
Estimated Distribution
The pie chart above illustrates the estimated breakdown of Malaysia’s Fintech landscape for 2024. The payments sector is the largest, followed by lending and e-wallet services. Other significant segments include remittances, Insurtech, wealthtech, and blockchain & crypto. Regulatory and compliance sectors also contribute to the broader Fintech ecosystem in the country.
Bank Negara Malaysia has played a key role in advancing regulatory sandboxes, allowing Fintech startups to innovate while adhering to financial regulations. Malaysia’s Fintech landscape is particularly strong in digital payments and Islamic finance.
In 2023, there was a notable increase in e-wallet adoption, with platforms like Touch ‘n Go and Boost leading the market. As a pioneer in Islamic fintech, Malaysia blends Sharia-compliant financial products with cutting-edge technology. This positions the country to lead in global markets with locally developed blockchain, AI, and Fintech solutions.
“Indonesia’s Fintech progression”
Indonesia has taken a leading role in the adoption of blockchain, AI, and fintech. The country’s fintech sector has seen remarkable growth, with the number of players increasing six-fold over the past decade.
Indonesia’s Fintech Landscape 2024
Estimated Distribution
Indonesia’s fintech landscape extends beyond payments, with wealth management, insurance, digital remittances, blockchain, and cryptocurrency also gaining momentum.
Major players like OVO and DANA are fueling the country’s digital payment surge while lending platforms such as Akulaku and Investree are transforming access to capital for both individuals and businesses.
Regulatory Frameworks
Malaysia’s Regulatory Environment
Malaysia has taken a proactive approach to emerging technologies, though this momentum has slowed in recent years.
The Securities Commission Malaysia (SC) has issued comprehensive guidelines on digital assets and digital asset exchanges, such as:
Bank Negara Malaysia has also introduced regulatory sandbox initiatives to foster fintech innovation while ensuring consumer protection. However, frequent policy shifts following changes in government have hindered the stability and growth of the regulatory framework.
To support healthy governance and long-term fintech growth, more stringent, long-term policies are needed to safeguard continuity.
This would allow legitimate companies working on AI, blockchain, and fintech solutions to thrive, positioning Malaysia as a leader in innovation.
Indonesia’s Regulatory Approach
Indonesia’s regulatory environment has been more reactive, but it’s gradually advancing.
Recent steps by BAPPEBTI to regulate crypto exchanges and Bank Indonesia’s efforts to introduce a central bank digital currency (CBDC) show the country’s growing commitment to regulating fintech and blockchain technologies.
Although still evolving, these efforts mark a significant shift toward a more forward-thinking regulatory landscape.
Challenges in Adoption
Both Malaysia and Indonesia face challenges in fully adopting AI, blockchain, and fintech. In Malaysia, the lack of skilled talent and slow adoption in traditional industries are key barriers. However, initiatives like the National AI Roadmap and blockchain education programs are addressing these challenges.
Indonesia’s primary hurdle is financial inclusion, particularly in rural areas where many lack access to digital banking services. Furthermore, regulatory uncertainty, especially around blockchain, continues to hamper widespread adoption.
The Verdict
Indonesia has taken a slight lead, especially in fintech adoption, supported by the rapid digitalization of financial services and a growing number of fintech players. However, Malaysia is catching up in areas like blockchain and AI, driven by strategic government initiatives and regulatory frameworks that could position the country for future dominance.
Final Thoughts
Malaysia’s cautious regulatory approach may have slowed progress compared to Indonesia. While strides have been made in sectors like construction and e-hailing, the country lags in adopting AI, blockchain, and fintech.
The Solution
There are numerous possibilities for accelerating tech adoption in Malaysia. The government and key industry bodies could lead by engaging in open dialogues with industry players and offering special loan incentives with lower interest rates for startups in emerging technologies.
Such initiatives would instill confidence in local entrepreneurs, allowing them to focus on creating and launching AI and blockchain-powered products and services.
Trainocate’s 5 Year Streak on Training Industry’s Top 20 IT Training Companies List
Trainocate celebrates its remarkable achievement of being listed among Training Industry’s Top 20 IT Training Companies for the fifth consecutive year. This recognition underscores Trainocate’s unwavering commitment to delivering world-class training, empowering IT professionals with cutting-edge skills, and staying ahead of industry trends. Read the full story to explore what makes Trainocate a trusted leader in IT education.
