The performance of peer-to-peer (P2P) financing platforms has varied across regions and over time. Despite this, the model presents a mutually beneficial opportunity: issuers gain access to the funding they need—often at more competitive rates—while investors enjoy the potential for higher returns compared to traditional investment avenues.

However, as with any investment, P2P financing carries inherent risks. To maintain investor confidence and ensure long-term sustainability, successful P2P platforms implement robust risk management frameworks and investor protection strategies. Here’s how it works.

Rigorous Credit Assessment and Underwriting

Peer-to-peer (P2P) financing platforms increasingly leverage advanced technologies such as data analytics, machine learning, and social profiling to evaluate borrower creditworthiness. Rather than relying solely on traditional credit scores, these platforms utilise alternative data sources—such as mobile phone usage, e-commerce transactions, social media behaviour, and bank transaction history—to assess a borrower’s identity, cash flow, and repayment patterns.

According to a report by Deloitte, over 60% of fintech lenders use non-traditional data for underwriting, significantly improving financial inclusion for thin-file or credit-invisible individuals. This approach is especially crucial in Southeast Asia, where a large portion of the population remains underserved by traditional financial systems. More than 70% of the regional population is considered underbanked or unbanked, with the highest combined rates found in Vietnam (79%), the Philippines (78%), and Indonesia (77%)—which also happen to be the region’s most populous nations.

Additionally, more than 60% of survey respondents in an industry study stated that they are actively exploring the use of alternative data and analytical techniques to enhance credit portfolio management, indicating a broader industry shift toward data-driven financing practices.

Tiered Risk Categorisation

To assist investors in making informed decisions, P2P financing platforms classify borrowers into risk categories based on factors such as repayment ability, financial history, and business performance. Returns are then aligned with the associated risk—higher returns for higher-risk borrowers, and vice versa.

Furthermore, a study published in the Journal of Economic Studies analysed over 1.8 million loan records from 2007 to 2020 and found that macroeconomic variables, such as unemployment rates and GDP growth, significantly influence loan default probabilities. Incorporating these factors into risk assessment models can improve the accuracy of borrower risk categorisation, aiding investors in making more informed diversification decisions.

Diversification Tools for Investors

One of the golden rules of investing is diversification. Reputable P2P financing platforms offer automated investment tools that spread investor funds across multiple loans and borrower segments. This strategy mitigates the impact of any single borrower defaulting, significantly reducing portfolio volatility.

According to the 4thWay P2P and Direct Lending Index, P2P financing has returned an average of 7.36% per annum over the past decade, outperforming the FTSE 100 index, which returned 4.90% per annum during the same period. Notably, P2P financing experienced no down years, while stock market investors faced three down years.

Legal Recourse and Recovery Mechanisms

When borrowers default, platforms may pursue debt recovery through legal and third-party channels. This includes restructuring repayment terms, engaging with collection agencies, or legal proceedings. Strong platforms will have clear recovery processes and update investors on status and outcomes. 

Should the default continue despite the LOD, platforms in Malaysia are authorised to initiate legal proceedings. This can involve applying for a court judgment, and if necessary, enforcement actions like wage garnishment or asset seizure.

Conclusion

Peer-to-peer (P2P) financing has emerged as a transformative model in the financial landscape, offering issuers access to funding at competitive rates while providing investors with the opportunity for higher returns. Despite its inherent risks, successful P2P platforms effectively manage these challenges by implementing robust risk management frameworks and investor protection strategies. In conclusion, P2P financing represents a viable alternative to traditional investment avenues, offering substantial returns while promoting financial inclusion. With well-implemented risk management practices and continuous investor transparency, P2P platforms can maintain investor confidence and ensure long-term sustainability in this evolving market.

Interested to learn more about our P2P Financing Platform?

*The information provided in this article is based on the current tax laws and regulations at the time of publication. As tax laws and deadlines may change, it is advisable to consult with the Inland Revenue Board of Malaysia (LHDN) or a professional tax advisor for the most up-to-date and accurate information regarding your specific circumstances.

Following the Inland Revenue Board of Malaysia’s (IRBM) announcement in May 2023 regarding the implementation of e-invoicing in 2024, the IRBM released updated e-Invoice Guidelines (Version 2.3), Specific Guidelines (Version 2.1), and SDK (Version 1.0) on their website on 6th April 2024.

The introduction of e-invoicing aims to support the growth of Malaysia’s digital economy and improve the efficiency of the country’s tax administration. By replacing traditional paper invoices, e-invoices will streamline financial transaction recording and enable real-time data collection.

To further promote the digital economy, the government will implement e-invoicing in phases to enhance the overall efficiency of Malaysia’s tax administration.

What is an e-Invoice?

An e-invoice is a digital record of a transaction between a seller (supplier) and a purchaser (buyer), processed through the government portal in real time for validation and record-keeping.

The e-Invoice in Malaysia includes 55 fields containing transaction details such as seller and buyer information, item description, quantity, price, tax, total amount, payment information, and more. Once validated and generated, the e-invoice will be assigned a Unique Identification Number (UIN) and a QR code by the MyInvois Portal, enabling online validation of the invoice.

What is the Timeline for Implementing e-Invoicing in Malaysia?

The implementation of e-invoicing in Malaysia began on 1st August 2024, initially applying to taxpayers with an annual turnover or revenue exceeding RM100 million. From 1st January 2025, the system will be extended to include taxpayers with annual turnovers or revenues between RM25 million and RM100 million. By 1st July 2025, e-invoicing will be mandatory for all taxpayers in Malaysia, regardless of their revenue or turnover.

Figure : e-Invoicing Implementation Timeline in Malaysia

The e-Invoicing Process in Malaysia

The process for generating an e-invoice in Malaysia differs based on the e-invoicing model (API or MyInvois Portal) and whether the transaction is B2B or B2C. Nevertheless, most of the steps in the process remain the same.

Figure: e-Invoicing Process in Malaysia

Types of e-Invoices in Malaysia

Under Malaysia’s e-Invoicing system, the following documents must be issued in electronic format:

Invoices

An invoice is typically used to document transactions between a supplier and a buyer. It serves as a formal request for payment for goods or services rendered. For example, a supplier selling medical equipment to a hospital would issue an invoice listing the items sold, quantities, unit prices, taxes, and the total amount due. Additionally, self-billed invoices are used to track expenses when a buyer issues an invoice to themselves on behalf of the seller.

Credit Notes

An invoice is typically used to document transactions between a supplier and a buyer. It serves as a formal request for payment for goods or services rendered. For example, a supplier selling medical equipment to a hospital would issue an invoice listing the items sold, quantities, unit prices, taxes, and the total amount due. Additionally, self-billed invoices are used to track expenses when a buyer issues an invoice to themselves on behalf of the seller.

Debit Notes

Debit notes are used to record additional charges or costs incurred after an e-invoice has been issued. These notes increase the original invoice value. For instance, if a buyer was initially invoiced for RM10,000 for machinery, but additional freight charges of RM500 apply, a debit note for the additional amount would be issued to the buyer.

Refund Notes

A refund note is issued by the seller to document the reimbursement of funds to the buyer. This typically happens when the buyer returns goods or overpaid on an invoice. For example, if a customer returns a defective product worth RM200, the seller would issue a refund note to acknowledge the repayment.

Who Is Required to Comply with e-Invoicing in Malaysia?

Conclusion

e-Invoicing in Malaysia marks a major shift toward digitalisation, improving tax administration and supporting the growth of the digital economy. With clear guidelines from the IRBM and a phased implementation starting in August 2024, businesses must prepare for the upcoming changes.

Adopting e-invoicing will streamline financial transactions and ensure compliance, helping businesses stay competitive. By 1st July 2025, e-invoicing will be mandatory for all taxpayers, making it essential to familiarize yourself with the new system to avoid disruptions and maximise its benefits.

Interested to learn more about our SME Financing Options?

*The information provided in this article is based on the current tax laws and regulations at the time of publication. As tax laws and deadlines may change, it is advisable to consult with the Inland Revenue Board of Malaysia (LHDN) or a professional tax advisor for the most up-to-date and accurate information regarding your specific circumstances.

Financial planning isn’t just for the wealthy—it’s for everyone! Having a solid plan helps you reach your money goals, whether it’s buying a home, saving for your child’s education, enjoying a stress-free retirement, or finally taking that dream vacation.

But it’s not just about big goals. A good financial plan also prepares you for life’s surprises, like medical emergencies, job loss, or unexpected home repairs. When you plan ahead, you’ll have peace of mind knowing you’re ready for whatever comes your way.

Understanding the Financial Planning Pyramid

The financial planning pyramid illustrates how individuals can allocate their funds across different investment levels. The wider a section of the pyramid, the larger the portion of funds that may be committed to those types of investments. However, financial situations vary, influencing how the pyramid is structured for each investor.

For example, an SME owner seeking business growth may allocate more loan to peer-to-peer (P2P) financing to pursue higher returns. In contrast, a retiree may prioritise safer investments, such as low-risk P2P notes, to protect their capital while still generating steady returns.

There isn’t just one way to build a financial planning pyramid. Some versions have only a few levels, while others break things down into many details. But no matter the version, one key idea stays the same—the safest financial choices are always at the bottom, while the riskier ones are placed at the top. This structure helps people balance their investments based on their financial goals and risk tolerance.

Levels of Financial Planning Pyramid

The financial planning pyramid is inspired by Maslow’s Hierarchy of Needs, a psychological theory that explains human motivation. 

Figure : Pyramid of Priorities

Examining each step in greater detail.

Level 1: Covering Your Essential Needs

At the base of the financial planning pyramid are the fundamental necessities everyone must prioritise. For most individuals, these essentials include:

Food: In Malaysia, a typical grocery bill for a single person might range from RM400 to RM600 per month.

Shelter: Monthly rent for a 45 m² furnished studio in a normal area averages around RM1,441.

Utilities: Basic utilities, such as electricity, heating, cooling, water, and garbage, for an 85 m² apartment average approximately RM348 per month.

Transportation: Depending on usage and location, monthly transportation costs can vary, with some estimates around RM150.

Health Insurance:As of 2024, about 42% of Malaysians do not have either personal or company-issued medical insurance.

Given the rising medical costs, which have been increasing at an average of 8% to 9% annually, securing health insurance is crucial to protect against unexpected medical expenses.

Level 2: Building Financial Security

Given the rising medical costs, which have been increasing at an average of 8% to 9% annually, securing health insurance is crucial to protect against unexpected medical expenses.

After addressing basic necessities, the next step in the financial planning pyramid involves enhancing financial security. 

Term Life Insurance: A term life policy is a cost-effective way to protect loved ones. A 30-year-old male non-smoker can get RM500,000 coverage for as low as RM2.64/day (~RM964/year)

Disability Income Insurance: This insurance provides monthly income if illness or injury prevents work, protecting financial goals like retirement. SOCSO offers some coverage, but private policies vary by age, occupation, and coverage amount.

Repaying High-Interest Debt: Clearing high-interest debt is key to financial stability. In Malaysia, credit card interest rates range from 15% to 18% per annum.

Level 3: Advancing Your Financial Goals

After securing basic insurance, eliminating high-interest debt, and initiating retirement savings, it’s time to focus on significant financial milestones, such as purchasing a home and planning for a family.

Saving for a Home Down Payment

In Malaysia, the typical down payment for first-time homebuyers ranges from 10% to 20% of the property’s price. For example, on a RM500,000 property, a 10% down payment amounts to RM50,000. 

Planning for Family and Children’s Future

If starting a family is part of your plan, it’s essential to prepare for the associated financial responsibilities. The cost of raising a child in Malaysia, from pregnancy through university education, is estimated to range between RM400,000 and RM1.1 million. 

Level 4: Enhancing Financial Stability and Preparing for Retirement

At this stage, individuals often find themselves well-established in their careers and family life.

Prioritising Children’s Education

Investing in your children’s education is a significant consideration. In Malaysia, tuition fees at public universities range from RM7,500 to RM15,000 for the entire program.

Maximising Retirement Contributions

With retirement approaching, it’s crucial to enhance your savings. In Malaysia, the Employees Provident Fund (EPF) serves as a mandatory retirement savings scheme. Additionally, the i-Saraan program allows voluntary contributions with a government incentive of 20% per year (up to a maximum of RM500)

Level 5: Enjoying Financial Freedom and Legacy Planning

At the pinnacle of the financial planning pyramid, individuals can reap the benefits of their diligent financial preparations. 

Transitioning into Retirement

In Malaysia, retirees can live comfortably on approximately $2,500 (around RM10,500) per month, which includes renting a three-bedroom condo with an ocean view.

Fulfilling Aspirations

With children grown and mortgages paid off, retirees often have the financial flexibility to pursue deferred dreams

The Bottom Line

In conclusion, looking at each step in more detail helps us understand the process better. It shows us why each action is important and how it helps to achieve the final goal. By breaking things down, we can make smarter decisions, improve the way we do things, and create a stronger strategy. This approach also helps us avoid mistakes and find better ways to succeed.

Interested to learn more about our SME Financing Options?

*This article is not meant to recommend CapBay products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.

Healthcare costs are rising globally, making medical treatment increasingly unaffordable for many individuals and families. While access to quality healthcare is a fundamental necessity, the financial burden associated with medical expenses can be overwhelming. 

Seven years ago, RM25 billion was allocated for healthcare in the Federal Budget. By 2024, this amount had increased to RM41.2 billion, yet it remains insufficient to meet actual needs. To achieve the target of 5% of GDP for healthcare funding, at least RM85 billion would be required today—more than double the current allocation and accounting for 22% of this year’s total federal budget. However, this level of investment remains unlikely.

The Growing Cost of Healthcare

Healthcare expenses in Malaysia have surged over the years, with medical cost inflation reaching 15% in 2024—significantly exceeding the global and Asia Pacific average of 10%. In the next three years, 64% of insurers expect medical costs to rise globally, with a more pronounced trend in the Asia Pacific region, where 76% foresee higher or significantly higher medical expenses.

Figure: Global Medical Trends 2023-2025

Key Drivers of Medical Cost Trends

1. Rising Demand for Mental Health Services

The COVID-19 crisis throughout 2020 altered this trend. Surveys of OECD populations overwhelmingly indicated a decline in mental health during March-April 2020. The decline in mental health across 2020-21 has underscored the critical need for a strong and effective mental health system. Over the next three years, one-third (33%) of insurers anticipate significant cost increases of 15% or more per person for mental health services. This trend is expected to be most pronounced in Europe, where 44% of insurers foresee such rises, followed by approximately 25% in the Asia Pacific region and 23% in MEA.

2. Rising Pharmacy Costs Expected

The Malaysian Pharmacists Society (MPS) warns that the prices of medicines and pharmaceuticals could increase by 5% to 10% due to the ringgit’s depreciation and the absence of a price control mechanism. Previously, reports indicated that medical costs in Malaysia rose by 12.6% last year, significantly surpassing the global inflation average of 5.6%. This surge was driven by an additional 600,000 adults requiring treatment for non-communicable diseases in 2019, along with rising medicine prices contributing to higher overall treatment costs.

3. Ongoing Demand for Advancements in Medical Technology and Infrastructure

Malaysia’s medical technology market is witnessing growing demand for advanced imaging equipment and telemedicine solutions. The advancement of new medical technologies and pharmaceuticals is a key factor contributing to the rising cost of healthcare. Globally, nearly 69% of surveyed insurers identified these technological expenses as the primary driver of increasing medical costs.

4. Increasing Strain on Private Healthcare Providers

Over half (57%) of insurers cite declining public healthcare quality or funding as a key driver of rising medical costs. This issue is most pronounced in Europe, where 75% of insurers attribute cost increases to the weakening public health system. In the Americas, 46% of insurers highlight this as a major factor, while 41% in the Asia Pacific region report similar concerns.

Why Medicals Should go for alternative financing

Medical providers should consider alternative financing for several key reasons:

1. Bridging Cash Flow Gaps

Hospitals, clinics, and healthcare providers often face delayed reimbursements from insurers and government programs. Alternative financing solutions, such as invoice financing and credit lines, can help maintain steady cash flow for operational expenses.

2. Upgrading Medical Equipment & Technology

Investing in state-of-the-art medical technology is essential but comes with high upfront costs. Alternative financing options, such as leasing or equipment financing, allow providers to access advanced technology without straining capital reserves.

3. Expanding Healthcare Services

For medical institutions looking to scale up—whether by opening new branches, adding specialised services, or upgrading facilities—traditional bank loans may not always be feasible. Alternative financing provides flexible funding options with quicker approvals.

4. Managing Rising Operational Costs

With medical cost inflation on the rise, covering expenses like staff salaries, medical supplies, and facility maintenance can be challenging. Alternative financing offers solutions such as working capital loans to help providers sustain operations without disruption.

5. Enhancing Patient Financing Options

Many patients struggle with out-of-pocket medical expenses. Offering financing solutions, such as installment payment plans or medical credit programs, enables more patients to afford quality healthcare while ensuring providers receive timely payments.

Interested to learn more about our SME Financing Options?

*This article is not meant to recommend CapBay products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.

Taking out a business loan seems simple enough. You borrow a certain amount, pay interest, and repay the loan over time. But what many small business owners don’t realise while seeking SME Financing in Malaysia is that the true cost of a loan isn’t just the interest rate. Lenders often include additional charges—some hidden in the fine print—that can significantly impact your total repayment amount.

Understanding these hidden costs can save your business from unexpected financial strain. Before you sign on the dotted line, here’s what banks don’t always tell you about business loans.

1. Origination Fees – The Price of Getting Started

Even before you receive your SME loan, you might already be paying for it. Many lenders charge an origination fee for processing your application and disbursing the loan. This fee is typically a percentage of the total loan amount, usually ranging from 1% to 3%.

For example, if you take out a RM500,000 loan with a 2% origination fee, you’re immediately paying RM10,000before you even receive the funds. If you’re unaware of this charge, it can catch you off guard and affect your budget planning.

2. Prepayment Penalties – Paying Early Isn’t Always a Good Thing

It’s natural to assume that repaying your loan early would be beneficial, saving you on interest payments. However, some banks penalise early repayments because they lose out on the interest they were expecting to earn over the loan term.

Prepayment penalties can be a fixed fee or a percentage of the outstanding balance, making it costly to pay off your SME loan ahead of schedule. If you think you might repay early, always check for these penalties before signing your loan agreement.

3. Late Payment Fees – More Than Just a Small Fine

Missing a payment doesn’t just mean paying a small late fee—it can trigger additional costs that add up quickly. Many lenders charge a fixed penalty or a percentage of the overdue amount, which can range from RM50 to a few hundred ringgit depending on the loan size.

What’s worse, some lenders may increase your interest rate after repeated late payments, making your loan even more expensive in the long run.

4. Annual Maintenance Fees – The Silent Drainer

Some business loan in Malaysia comes with an annual service or maintenance fee, which is charged just for keeping the loan active. This fee can range from a few hundred to several thousand ringgit over the loan term. While it might seem small compared to your total SME loan amount, it’s an added expense that many borrowers don’t anticipate.

5. Loan Insurance – A Requirement You Didn’t Plan For

In some cases, banks require borrowers to purchase business loan insurance to cover repayments in case of death, disability, or business failure. While this insurance provides protection, it also increases the cost of the loan.

The premium is usually added to your monthly repayment, meaning you end up paying more than expected over time. If your lender requires loan insurance, make sure to factor this into your cost calculations.

6. Legal & Administrative Fees – Small Charges That Add Up

Legal and administrative fees are another hidden cost that borrowers often overlook. Some banks charge extra for contract reviews, documentation, and collateral assessments. These fees may seem minor individually, but they can add up significantly, especially if legal processing is required.

Before agreeing to a Business loan in Malaysia, always ask if there are any legal or administrative costs beyond what’s stated in the business loan agreement.

7. Fluctuating Interest Rates – The Trap of Variable-Rate Loans

Many SMEs in Malaysia opt for variable interest rate loans to take advantage of lower rates. However, what starts as an affordable SME loan can quickly become expensive if interest rates increase.

For example, a loan with an initial 5% interest rate could rise to 7% or more over time, increasing your monthly repayments unexpectedly. Before choosing a business loan in Malaysia, always clarify whether the interest rate is fixed or variable to avoid surprises.

How to Avoid These Hidden Costs

To ensure you’re not caught off guard by hidden fees, keep these tips in mind:

Plan your repayments carefully – Avoid unnecessary penalties by making payments on time and sticking to your schedule.

Read the fine print – Always go through the business loan agreement carefully and clarify any vague terms.

Ask for a full breakdown of fees – Request a detailed list of all potential charges before committing.

Compare multiple lenders – Different banks have different fees, so shopping around can help you find the best SME Financing deal.

Negotiate where possible – Some fees, such as origination fees and prepayment penalties, may be negotiable.

The Bottom Line

A business loan isn’t just about the interest rate—it’s about the total cost of borrowing. Many SMEs get caught in financial trouble because they don’t factor in hidden costs that make loans more expensive than expected.

By being aware of these additional charges, you can make smarter financial decisions and choose a loan that truly benefits your business. After all, the best SME Financing isn’t the one with the lowest interest rate—it’s the one with the lowest total cost. Read “SME Financing 101: Understanding Your Options” to learn more about all the SME Financing options avaialable.

Interested to learn more about our SME Financing Options?

*This article is not meant to recommend CapBay products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.

In today’s fast-evolving business landscape, efficiency is not just an objective for small and medium-sized enterprises (SMEs)—it is crucial for their survival and growth. With rising competition and shifting consumer expectations, SMEs must adopt innovative strategies to optimise operations, cut costs, and boost productivity. Artificial Intelligence (AI) has become a game-changing tool, providing solutions that can revolutionise multiple aspects of business operations.

In today’s fast-evolving business landscape, efficiency is not just an objective for small and medium-sized enterprises (SMEs)—it is crucial for their survival and growth. With rising competition and shifting consumer expectations, SMEs must adopt innovative strategies to optimise operations, cut costs, and boost productivity. Artificial Intelligence (AI) has become a game-changing tool, providing solutions that can revolutionise multiple aspects of business operations.

Here are five practical ways Malaysian SMEs can harness AI to enhance growth, improve efficiency, and seize new opportunities.

Automating Customer Support

AI chatbots and virtual assistants are revolutionising customer service by automating responses and providing real-time support. Capable of handling multiple inquiries simultaneously, AI significantly reduces wait times and ensures immediate responses. According to a Microsoft study, 90% of customers expect prompt assistance when they have a service-related question.

Operating 24/7, AI-powered systems guarantee continuous support, which is particularly valuable for businesses with a global audience. This constant availability enhances customer satisfaction and fosters loyalty.

Moreover, automating customer interactions can lead to significant cost savings. A report by IBM states that AI solutions can reduce customer support costs by up to 30%, enabling SMEs to optimise resource allocation more efficiently.

Leverage Analytics to Gain Deeper Customer Insights

Understanding customer behavior is important for any SME. AI tools like Google Analytics, HubSpot, and social media insights help provide useful data for better decision-making. Today, 90% of business and analytics professionals say data and analytics are important for their company’s digital growth.

According to a report by Master of Code, 91% of businesses are positive about using AI for consumer engagement, and 62% state that AI aids in understanding buyers.

Figure 1: Rising Customer Expectations in Support Services

Enhancing Marketing Impact

AI-driven marketing tools enable SMEs to craft personalised campaigns that deeply connect with their target audiences. By analysing extensive customer data, AI identifies distinct segments based on behavior, preferences, and demographics, allowing for more targeted marketing strategies tailored to specific groups. For instance, AI-powered tools like Omneky use machine learning to generate and test various ad creatives, optimising campaigns for better engagement.

Moreover, AI can predict future trends and consumer behaviours by examining historical data. Predictive analytics enables businesses to anticipate customer needs and tailor their marketing efforts accordingly. For example, predictive models can forecast which customers are most likely to convert based on their past interactions, allowing for more efficient resource allocation and improved conversion rates. 

The global AI in marketing market was valued at approximately USD 20.45 billion in 2024 and is expected to grow at a CAGR of 25.0% from 2025 to 2030. This growth is driven by the increasing adoption of machine learning and AI, which enhance social media engagement, enable personalised customer experiences, and support the expansion of online shopping.

Figure 2: Artificial intelligence in Marketing Market

Optimising Inventory and Supply Chain Operations

The AI-driven supply chain market has experienced rapid growth in recent years. It is projected to expand from $4.92 billion in 2024 to $7.19 billion in 2025, reflecting a compound annual growth rate (CAGR) of 46.2%. The AI-powered supply chain market is set for significant expansion in the coming years, projected to reach $30.81 billion by 2029 with a compound annual growth rate (CAGR) of 43.9%.

Figure 3: Artificial intelligence forecast in Supply Chain Global Market Report 2025

By analysing past sales data alongside external factors like seasonality and economic trends, AI can accurately forecast product demand. This enables businesses to maintain optimal inventory levels, preventing stock shortages or excess inventory. Efficient inventory management reduces carrying costs and improves cash flow, with effective demand forecasting helping businesses cut excess inventory by up to 30%. Additionally, AI enhances supply chain operations—such as route planning and warehouse management—ensuring timely product delivery while minimising waste.

The Bottom Line

AI is no longer a luxury but a necessity for Malaysian SMEs looking to stay competitive in an increasingly digital world. From automating customer support and leveraging data analytics to enhancing marketing impact and optimizing supply chains, AI offers powerful solutions to boost efficiency and drive business growth. With Malaysia’s digital transformation initiatives creating a supportive environment for AI adoption, SMEs that embrace these technologies will gain a significant edge in their industries. By integrating AI into their operations, businesses can improve decision-making, reduce costs, and unlock new opportunities for sustainable success.

Interested to learn more about our SME Financing Options?

*This article is not meant to recommend CapBay products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.

Cash flow management is one of the biggest challenges in the construction industry. The nature of construction projects—long payment cycles, high upfront costs, and reliance on progress payments—can strain cash flow, making it difficult for contractors and subcontractors to sustain operations. However, with strategic planning and financial solutions, businesses can mitigate these challenges and ensure smoother project execution.

Common Cash Flow Challenges in Construction

1. Delayed Payments

Construction projects often involve multiple stakeholders, and payment terms can extend to 60, 90, or even 120 days. These long payment cycles put significant strain on contractors who must cover labor and material costs upfront.

2. High Upfront Costs

Purchasing materials, renting equipment, and paying workers require substantial capital. Without sufficient cash reserves, construction companies may struggle to fund projects effectively.

3. Unpredictable Expenses

Unexpected costs such as project delays, material price fluctuations, and regulatory changes can disrupt financial planning, leading to cash flow shortages.

4. Retention Payments

Many contracts include retention clauses where a percentage of the payment is withheld until project completion. This can further restrict available cash flow.

Strategies to Improve Cash Flow in Construction

1. Negotiate Better Payment Terms

Negotiate shorter payment cycles with clients or staggered milestone payments to maintain a steady cash flow. Additionally, ensure contracts have clear terms regarding late payment penalties to encourage timely payments.

2. Leverage Invoice Financing

Invoice financing allows businesses to convert outstanding invoices into immediate cash. This helps bridge the gap between issuing an invoice and receiving payment, ensuring that working capital remains intact.

3. Use Supply Chain Financing

Construction companies can collaborate with financial institutions to access supply chain financing, which allows suppliers to get paid earlier while extending payment terms for contractors.

4. Implement Strong Cash Flow Forecasting

Regularly monitor cash flow projections to anticipate potential shortfalls and make informed financial decisions. This helps businesses allocate resources efficiently and avoid liquidity crises.

5. Optimise Project Management

Efficient project planning minimises delays and cost overruns, ensuring that cash flow remains stable. Investing in construction management software can help track expenses and optimize resource allocation.

6. Diversify Revenue Streams

Exploring additional services such as maintenance contracts, consulting, or small-scale development projects can generate alternative income sources, reducing dependency on large, long-term contracts.

7. Reduce Material and Equipment Costs

Negotiating bulk discounts, leasing equipment instead of purchasing, and optimising material procurement can help minimise upfront costs, improving overall cash flow.

8. Access Alternative Financing Solutions

Alternative financing options like working capital loans, bridging finance, and peer-to-peer financing can provide quick access to SME financing, ensuring business continuity.

The Bottom Line

Managing cash flow effectively is crucial for the success of construction businesses. By implementing strategic financial solutions such as invoice financing, supply chain financing, and strong forecasting, construction companies can overcome liquidity challenges and maintain steady operations. Investing in better project management and optimising procurement strategies can further enhance financial stability, ensuring long-term growth and sustainability in the industry.

Interested to learn more about our SME Financing Options?

*This article is not meant to recommend CapBay products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.

With Bank Negara Malaysia (BNM) granting licenses to five digital banks, advertisements have become ubiquitous, from LRT/MRT screens to cars wrapped with GXBank’s details. The rapid rise of internet connectivity has ushered in a new era of money management through digital banks that operate exclusively online.

Since the Covid-19 pandemic, more Malaysians have embraced cashless transactions. However, until recently, banking still required physical visits to local branches. Digital banks operate in a fundamentally different way from traditional banks, providing distinct advantages and challenges. A survey by Deloitte reveals that 78% of consumers prefer digital channels for banking transactions, underscoring the growing demand for seamless digital experiences.

Let’s delve into these differences and examine how digital banks are benefiting Malaysia.

Who are the entities behind Malaysia’s five new digital banks?

What Distinguishes Digital Banks from Traditional Banks?

Accessibility

Digital banks offer unparalleled accessibility, allowing customers to open accounts, transfer funds, apply for loans, and manage their finances entirely online without the need to visit a physical branch. This convenience is especially advantageous for individuals with busy schedules.

In contrast, while traditional banks provide online banking services, many essential functions still require in-person visits. For instance, a 2019 survey by the Federal Deposit Insurance Corporation (FDIC) found that 83% of banked households engaged with a teller or other bank employee in person at a branch.

Figure 1: Bank Branch Visits, Among Banked Households, by Year

Furthermore, a 2022 survey indicated that 46% of individuals conducted their banking in person at a branch, an increase from 28% in 2021.

These statistics highlight the ongoing reliance on physical branches for various banking services, even as digital banking continues to grow.

Customer Interaction

Digital banks primarily engage with customers through online channels such as chatbots, mobile applications, and email, facilitating swift and efficient communication without the need for in-person interactions. This approach caters to the growing demand for digital services, with 91% of consumers considering digital banking capabilities crucial when choosing a bank.

In contrast, traditional banks offer face-to-face customer service at their branches. This personal interaction is particularly beneficial for complex financial matters, providing customers with tailored assistance. However, it also necessitates visiting a physical branch for support, which may be less convenient for some. Notably, 82% of customers still value access to a local branch, indicating the importance of in-person services alongside digital options.

Despite the rise of digital banking, traditional banks continue to maintain a significant presence. As of 2023, large traditional banks account for approximately 42% of consumer relationships, highlighting their enduring role in the financial sector. 

Technology utilised 

The fintech industry has seen remarkable growth in recent years, with AI playing a crucial role in fueling this expansion. The global fintech market is now valued at $340.1 billion. Digital banks are a part of this trend and use the latest fintech technologies, including artificial intelligence (AI) and data analytics, to offer personalized services and improve security. They work well with mobile apps and other digital platforms, making the user experience smooth and efficient.

On the other hand, traditional banks are also using new technologies, but they often depend on older systems. These systems can be less efficient and harder to connect with modern digital platforms. Because of this, traditional banks may provide slower service and be less flexible than digital banks.

For instance, a 2023 report highlighted that JPMorgan Chase leads the banking sector in AI adoption, employing a significant portion of the industry’s AI talent pool.

Product and Service Offerings

Digital banks typically offer a streamlined range of products focused on core banking services, such as savings accounts, loans, and payment solutions. They often emphasize user-friendly features and competitive interest rates. A 2021 survey revealed that 86% of digital banks offer peer-to-peer (P2P) payment services, 75% provide budgeting tools, and 55% offer investment services.

In contrast, traditional banks provide a broader array of financial products, including savings and checking accounts, loans, credit cards, investment services, and insurance. This extensive product range allows them to cater to diverse financial needs, positioning them as a one-stop shop for many customers. According to a 2023 report, traditional banks in the United States are projected to generate a net interest income of $385 billion in 2025, with commercial banking services expected to dominate this figure.

Compliance 

Digital banks and traditional banks differ in their compliance with BNM regulations primarily due to their operational models and target markets. Digital banks, regulated under BNM’s Digital Banking Framework, are given flexibility during their foundational phase with lower capital requirements (RM100 million initially) and asset size caps (RM3 billion). This allows them to focus on financial inclusion and underserved segments, relying heavily on technology and alternative credit assessments.

In contrast, traditional banks, governed by the Financial Services Act 2013, adhere to stricter capital requirements (RM2 billion minimum) and broader prudential regulations aligned with Basel III. They focus on systemic stability and serve a wider market with comprehensive financial products. Both must comply with BNM’s risk management and cybersecurity standards, but digital banks face stricter monitoring to ensure alignment with inclusion goals.

Summery

The Bottom Line

The rise of digital banks in Malaysia marks a shift toward more accessible and convenient banking through online platforms. By leveraging advanced technologies like AI and data analytics, digital banks provide personalised services and improve security, catering to customers with busy lifestyles or limited access to traditional banking.

While traditional banks continue to offer a wider range of services and personal interactions, their reliance on legacy systems may limit their flexibility. As digital and traditional banks evolve, both will play vital roles, meeting diverse customer needs and shaping the future of banking in Malaysia.

Interested to learn more about our SME Financing Options?

*This article is not meant to recommend CapBay products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.

For years, we’ve all heard the popular phrase: “Money cannot buy happiness.” While it’s true that happiness is influenced by factors beyond financial wealth, this saying oversimplifies the reality of modern life. In today’s world, financial stability and smart investments can significantly contribute to overall well-being and peace of mind.

One way to achieve financial growth and stability is through Peer-to-Peer (P2P) investment, which offers individuals the opportunity to grow their wealth while contributing to the financial ecosystem. Here are a few reasons why it’s time to rethink the notion that money can’t buy happiness and consider how P2P investment can play a crucial role in achieving financial goals and personal fulfillment. 

1. Financial Security Leads to Peace of Mind

Money might not directly buy happiness, but it does provide security. When you have a stable financial foundation, you can focus on what truly matters in life, such as family, health, and personal growth. P2P investments allow you to diversify your portfolio, create passive income streams, and reduce financial stress, ultimately leading to a more fulfilling life.

2. Enabling Life Experiences

From traveling the world to pursuing education or starting a business, financial resources unlock opportunities for meaningful life experiences. Investing in P2P lending can provide steady returns, allowing you to fund your dreams and enjoy life without constantly worrying about money.

3. Helping Others While Growing Your Wealth

P2P investment platforms not only offer investors the chance to earn attractive returns but also contribute to the financial empowerment of individuals and small businesses. By lending directly to borrowers, you help entrepreneurs and individuals achieve their goals, fostering a sense of fulfillment and happiness that comes from making a positive impact.

4. Freedom of Choice

Money provides the freedom to make choices that align with your values and passions. With P2P investments, you can have greater control over your financial journey, choosing investment opportunities that align with your risk tolerance and long-term aspirations.

5. Planning for a Secure Future

Investing wisely today ensures a comfortable tomorrow. P2P lending platforms offer a flexible and accessible way to build wealth over time, helping you prepare for major life events such as retirement, purchasing a home, or funding your children’s education. Having a well-structured financial plan can bring a deep sense of satisfaction and optimism for the future.

The Bottom Line

While money alone may not guarantee happiness, it certainly provides the foundation upon which a fulfilling life can be built. By leveraging the potential of P2P investments, individuals can achieve financial independence, create meaningful experiences, and contribute to the well-being of others. It’s time to shift our mindset and recognize that smart financial decisions can lead to a happier, more secure life.

Interested to learn more about our SME Financing Options?

*This article is not meant to recommend CapBay products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.

The healthcare industry is evolving at an unprecedented pace, influenced by rising operational costs, groundbreaking technological advancements, and shifting patient expectations. With the demand for high-quality and accessible healthcare services increasing, providers are under constant pressure to upgrade facilities, invest in the latest medical technologies, and enhance patient experiences. However, traditional financing methods often fall short in addressing the unique and complex financial needs of healthcare practices. These conventional approaches can be rigid, slow, and insufficient in providing the necessary capital to meet the growing demands of the industry.

To sustain and expand their operations, healthcare providers are turning to alternative financing solutions that offer greater flexibility, quicker access to funds, and tailored financial support. These innovative financing options empower medical practices to bridge cash flow gaps, invest in critical infrastructure, and focus on delivering superior patient care without being constrained by financial limitations. 

Why Healthcare Practices Need Alternative Financing in Malaysia

Healthcare providers often face significant financial challenges, including high operational costs, expensive medical equipment, regulatory compliance requirements, and fluctuating cash flows. The Medical Price Index in Malaysia has escalated more than the Consumer Price Index, indicating that healthcare costs are increasing at a faster rate than general consumer goods.

Historical-based healthcare financing has led to disparities in access and inefficiencies in resource allocation, necessitating alternative financing methods to bridge these gaps. Alternative financing solutions can provide the flexibility and financial support necessary to address these challenges effectively.

Types of Alternative Financing for Healthcare Practices

1. Medical Equipment Financing

Medical equipment is a significant investment for any healthcare provider. Medical equipment financing allows practices to acquire the latest technology without upfront costs, making it easier to stay competitive and provide high-quality care. Leasing and equipment loans are popular options that help spread costs over time.

2. Revenue-Based Financing

Revenue-based financing (RBF) offers healthcare practices access to capital in exchange for a percentage of future revenues. This model provides flexibility by aligning repayment with the practice’s income, making it an attractive option for clinics with fluctuating cash flow.

3. Peer-to-Peer (P2P) Financing

P2P Financing platforms connect healthcare providers with investors willing to fund their operations. This type of financing can offer competitive interest rates and faster approval times compared to traditional loans.

4. Healthcare-Specific Business Loans

Several financial institutions offer loans specifically tailored for healthcare providers. These loans often come with favourable terms and flexible repayment schedules, designed to accommodate the unique needs of medical practices.

5. Government Grants and Subsidies

Various government programs provide grants and subsidies to support healthcare initiatives, especially in underserved areas. These funds can help healthcare practices expand their services and invest in new technologies.

6. Factoring and Invoice Financing

Healthcare practices often experience delays in insurance reimbursements and patient payments. Invoice financing or factoring allows practices to sell outstanding invoices to a third party for immediate cash, improving cash flow and reducing financial strain.

Benefits of Alternative Financing

Flexibility

Tailored solutions that align with the unique financial needs of healthcare providers.

Faster Approval

Compared to traditional loans, alternative financing options often have quicker application processes and approvals.

Improved Cash Flow Management

Solutions like factoring help maintain consistent cash flow despite payment delays.

Access to the Latest Technology

Equipment financing and leasing enable practices to invest in cutting-edge medical technology.

The Bottom Line

Alternative financing solutions offer healthcare practices the opportunity to manage financial challenges, invest in growth, and enhance patient care. By carefully evaluating available options, healthcare providers can select the most suitable financing solution to meet their specific needs and objectives.

Interested to learn more about our SME Financing Options?

*This article is not meant to recommend CapBay products or be used as a tool to make any investment or financial decisions. Product recommendations must be independently evaluated before you invest. Any product recommendation by CapBay must not be regarded as financial planning or financial advice.