by Andrew Tan, ChiefExecutive Officer, Kiple X Sdn Bhd (kipleX)

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At the start of 2020, Shree (not her real name), who hailed from a small town, was ecstatic to secure 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. However, her aspirations took a plunge when the global pandemic hit. As her role was not within the essential services, 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 in2020 alone, as reported by the Social Security Organisation (Perkeso)[1].This downturn brought to light the lack of financial planning and literacy amongst Malaysians, which at the height of movement controls in 2021 gave rise to the white flag campaign with households unable to afford even essentials.

Recently, RinggitPlus’ MalaysianFinancial Literacy Survey 2021[2] revealed that 56% of Malaysians save less than RM500 or are unable to save monthly, while 52% will not be able to survive for more than three months if they lose their job.

Beyond the financial challenges, this has also inevitably led to the decline in mental health as revealed in a study by Malaysia’s Credit Counselling and Debt Management Agency (AKPK)[3]in August 2021. In their 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 financial stress had taken a toll on their mental health.    

Addressing the financial literacy gap through technology

In a move to improve financial stability among those who lost their incomes during the pandemic, various fiscal measures such as stimulus packages, wage subsidies, and cash handouts were introduced by the government to help the rakyat stay afloat.

However, to enable greater longer-term impact, there is a need to improve the levels of financial literacy among Malaysians.Leveraging financial technologies to address specific pain points provides an accessible measure towards helping Malaysians increase their financial capabilities to help them safeguard against future crisis.

With the Malaysia Digital EconomyCorporation (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 leaders Oppotus reporting that in Q3 2020, 60% of Malaysians had used an e-wallet, more than double the number from 27% in the corresponding quarter the year before[4].

Aside from e-wallets and mobile payments, fintech can also be tailored to address other pain points, including solutions that raise awareness and offer guidance to help individuals better manage their finances. Fintech can also revolutionise how employers offer compensation and benefits plans for today’s workforce, enabling them to support employees to gain financial control, which leads to better mental health and performance.

Improving access to simple, effective digital tools

One way through 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 mentioned by Safwan Shah in a recent TedX Talk[5],the pandemic revealed the urgent need to address financial stress for those living from paycheck to paycheck, 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 wellbeing 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 WellnessBarometer Survey[6] showed that financial stress can cost employers an astounding $4.7 billion dollars in losses a week, as well as at least 15 hours of lost productivity. Employees also often seek out help when it comes to managing personal finances, as seen in the 87% who shared this sentiment in the PWC Employee Financial WellnessSurvey[7].

Coupled with this, fintech tools that enable individuals to personally 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 personal charge of their financial wellbeing.

The RinggitPlus MalaysianFinancial Literacy Survey 2021 reported that at least 85% of Malaysians think that their EPF savings may not be sufficient for retirement. Amongst youths and young adults like 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 amore 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 standings can gain better insights into their habits and rebuild their financial stability, even as Malaysia bounces back from these challenging two years.

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Andrew Tan is the Chief Executive Officer of kipleX, anInnovation Studio and Venture Capital firm united around building and investing in exceptional start-ups. A part of digital solutions leader Green Packet Berhad, Andrew and his team are focused on making investments and co-creating digital solutions in the finance, property, mobility, and healthcare space that are transforming human lives across Southeast Asia. 

[1] https://www.thestar.com.my/news/nation/2020/12/09/nearly-100000-malaysians-have-lost-jobs-since-start-of-mco-says-hr-ministry

[2] https://ringgitplus.com/en/blog/ringgitplus/are-malaysians-on-the-road-to-financial-recovery-yet.html

[3] https://malaysia.news.yahoo.com/study-shows-financial-stress-35pc-032213636.html

[4] https://www.nimbleappgenie.com/blogs/what-are-the-e-wallet-trends-in-malaysia/

[5] https://www.youtube.com/watch?v=PHGnRTszzeo

[6] https://www.brightplan.com/hubfs/2021%20Wellness%20Barometer%20Survey%20Infographic%20-%20FINAL.pdf

[7] https://www.pwc.com/us/efwsurvey

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