The banking and ICT industries have a linked heritage that goes back to the very beginning of the information age when banks were among the first organisations to invest in ICT to improve their operations. Today this link has become even stronger as banks come under increasing pressure to drive efficiency while delivering better levels of service to their customers. ICT is indispensible in this effort not only because it allows for better information management and use, but because it allows banks to engage partners to deliver specialised services; also known as shared services & outsourcing (SSO).

In 1996, the MSC Malaysia national ICT initiative was founded as a key instrument of Malaysia’s transformation into a high-income, knowledge-based economy through ICT-led innovation across the Rakyat, Industry and Government. Since then until the end of 2009, MSC Malaysia has generated more RM24.8 billion in revenues and has created more than 100,000 high-value jobs throughout Malaysia.

Today there are 12,000 ICT companies in Malaysia, up from only 300 in 1998, and MSC Malaysia is home to over 2,000 active local and multinational technology companies, more than 200 of which are in the shared services and outsourcing (SSO) industry with operations that span information technology (IT) outsourcing, business process outsourcing and knowledge process outsourcing.

The Malaysian SSO industry has grown 15% annually and touched US$1.1 billion in 2009. The industry is expected to continue to grow at 15% over the coming years and to reach US$1.9 billion by 2013.

The Multimedia Development Corporation (MDeC), the driver of the MSC Malaysia national ICT initiative, continues to nurture, support and promote the growth and development of Malaysia’s SSO industry through facilitation of market access, business development, financial assistance, technical assistance, capability improvement and human capital development. MDeC remains a one-stop developmental agency to realising the MSC Malaysia vision.

In A.T. Kearney's 2009 Global Services Location Index Survey, Malaysia retained its third position after India and China as the most preferred location for global outsourcing services with the availability of skilled workers, competitive cost and an ideal business environment being some of the country's pull factors.

At the same time, Malaysia is at the forefront of global Islamic finance, with an average annual industry growth of 20 percent over the past five years, and active government and industry efforts to promote the nation as a global hub for products and services that adhere to Shariah law. A study by the Federal Reserve Bank of San Francisco stated that Islamic banking assets of Malaysia are estimated to be $68 billion for June 2009. The same study expects the global Islamic finance market to touch $1 trillion in 2010.

This has triggered a race among several established global financial centers like London, Hong Kong and Singapore together with newer markets like Luxembourg, South Korea and Australia to take an early lead as global hubs of Islamic financial.

A survey by Kuwait Finance House Research Ltd. found that Malaysia has a clear lead over other global Islamic financial centres in the areas of regulatory framework and legislation, infrastructure, offering in products and services, risk management and audit, and the marketing of and education in Islamic finance.

Through comprehensive and proactive government engagement and fiscal planning, the Malaysian Islamic financial sector is seen as one of the most progressive and attractive in the world.

Bank Negara Malaysia is in the process of launching a Shariah governance framework (SGF) which will set the standards for Shariah compliance in Islamic finance globally for the next decade. The SGF will provide comprehensive guidance on the roles and responsibilities of the Shariah committee, and the board and management of Islamic financial institutions in ensuring that their operations are in compliance with Shariah principles.

Further innovations, market incentives and financial liberalisation are planned in the coming years.

With a convergence of excellence and resources in both SSO and Islamic finance, Malaysia is in a privileged position to drive performance in the Islamic banking industry by adopting best business practices and infusing innovation to enable sustainable growth in the financial sector.

SSO is a well-established business practice employed by many large financial institutions to drive value creation for their customers, infuse innovation into their corporate culture and maintain cost competitiveness of their operations, at a global scale. And global Islamic finance would be wise to embrace the opportunity Malaysia presents to blend two market-leading industries for greater mutual success.