'Islamic Finance for Impact – The Next Measure of Success'

It is a pleasure to be here at the 21st Kuala Lumpur Islamic Finance Forum.

From scale to impact

Over the last five decades, Islamic finance has demonstrated its capacity to grow. Our first steps were to build credibility, strong foundations, and scale. At the midpoint, the focus shifted towards strengthening competitiveness, innovation, and capabilities.

Today, the context is markedly different. Economies are confronting climate risks, demographic change, wider developmental needs and geopolitical fragmentation. These forces are reshaping our economies and financing needs.

This year’s theme for KLIFF speaks directly to this task. It invites us to look beyond scale and consider outcomes. It raises the standard by which Islamic finance should now be measured. The challenge is to demonstrate not only continued strength, but greater relevance to the economies and societies it serves.

The question before us today can no longer simply be: “Can Islamic finance compete and grow?”. Rather, we must ask a more consequential question:

'What does that growth now enable?'
'What opportunities can it create?'
'What outcomes can it deliver?'

At the recent Financial Institutions Directors' Education (FIDE) programme, I asked whether we are still financing yesterday's economy or positioning ourselves for Malaysia’s next phase of growth. Today, I want to take that conversation one step further. Not just what Islamic finance should finance. But what that should achieve and how do we measure our success.

Redefining the measure of success

This focus on outcomes is not new. It is rooted in the foundations of Islamic finance. History reminds us that finance was not understood as an end in itself, but as a means of supporting broader economic and societal objectives. The legitimacy of financial activity was closely connected to the value it created beyond individual transactions.

Consider the great külliye complexes of the Ottoman Empire^[1] – including the remarkable Süleymaniye Complex. Sustained through waqf, they brought together schools, hospitals, libraries, welfare services, and commerce.

They were not just a collection of buildings. They were a complete ecosystem built around a mosque, designed to create lasting societal outcomes. Success was measured by the greater purpose it sought:

• to improve education;
• to enhance health services;
• to enable more upward social mobility; and
• to strengthen community wellbeing across generations.

There is an important lesson here: The resources mattered, but the outcomes mattered more.

This calls for us to widen our measure of success:

• From assets to outcomes;
• From transactions to transformation;
• From financial inclusion to meaningful economic participation;
• From Shariah compliance to the fulfilment of Shariah purpose; and
• From growth of finance to growth enabled by finance.

These measures represent an evolution in how we understand role of finance and its contributions to society and economy.

Finance that empowers

This perspective is especially relevant in the context of financial inclusion and economic participation, where financial access itself should not be viewed as the final and desired outcome. This matters in Malaysia, where Micro, Small and Medium enterprises (MSMEs) contributed almost 40% of GDP^[2] and accounted for almost 50% of total employment in 2025 – with more than three-quarters of them are microenterprises. Yet, many of these businesses continue to face challenges beyond access to finance.

Today, Malaysia’s social finance initiative, iTEKAD^[3] offers a practical illustration. At first glance, it is a social finance programme. But financing alone does not create empowerment. Sustainable, lasting empowerment requires:

• financing and protection,
• financing and capability,
• financing and access to markets.

Put together, these elements help microentrepreneurs build stronger and more sustainable livelihoods. It addresses the interconnected constraints that can prevent low-income entrepreneurs from sustaining and expanding their businesses.

iTEKAD has supported nearly sixteen thousand participants through its entrepreneurship, employment, and protection programmes. But its impact is best understood through the lives it transformed. Let me share the story of Puan Fauziah, a microentrepreneur from Klang.

Puan Fauziah began with a home-based business selling traditional ginger floss for postpartum mothers. Like many, she had determination. What she lacked were the resources to grow. Through iTEKAD’s grant financing and entrepreneurship training, her business expanded. Today, she reaches customers through digital platforms and has even exported to the United Kingdom through a halal marketplace.

That is the outcome that matters. A stronger livelihood, greater resilience and upward economic mobility.

This also brings us to an equally important consideration on capital allocation. Capital is never passive. Every financing decision shapes the economy. It influences which sectors expand, which businesses grow and which innovations receive support. Capital allocation is therefore an act of stewardship of the nation’s economy.

Strengthening Malaysia’s productive capacity requires capital to flow to the right places. Traditional approaches may no longer be sufficient. Islamic finance can provide innovative risk-sharing solutions, especially where broader capital sources, structures and different risk profiles are needed. Through i-CITA, launched in 2025, Bank Negara Malaysia (BNM) is facilitating industry learning in offering risk-sharing solutions for key areas such as food security and climate resilience.

Collective stewardship, greater impact

These challenges cannot be addressed through isolated efforts. Impact must be a shared endeavour. Regulators, financial institutions, Shariah scholars, and the wider industry must work together to build the ecosystem that impactful innovation requires.

At BNM, our role is to enable innovation, support responsible risk-taking and create a conducive environment for impactful solutions. The Digital Asset Innovation Hub launched in June 2025 provides one platform for the industry to explore emerging technologies and use cases with real economic value.

We are also reviewing the Shariah Contract Framework to promote broader and more effective application of Shariah contracts. We will be issuing a Strategy Paper and Exposure Draft this year.

The next Financial Sector Blueprint will also carry this broader shift. We want to align the financial sector more closely with Malaysia's future socioeconomic priorities. Our measure of success must also evolve in tandem.

As we look ahead, three priorities warrant our focus:

1. First, align strategies and capital with purpose. This means directing resources towards higher-value sectors and renewable energy and strengthening resilience against climate and economic shocks.
2. Second, innovate around real needs. We want to build on existing efforts to design solutions around the realities faced by households, and businesses, particularly where needs remain underserved or unmet. This includes financial and technical support for the expansion of halal MSMEs.
3. Third, keep values at the centre. Fairness, integrity, empathy. These values must remain central to business decisions and market conduct. Maqasid Shariah is our compass. We want to get to impactful value-based outcomes.

Islamic finance has travelled far. 

It has built scale.
It has built sophistication. 
It has built credibility.

Now, the next measure of success is where we go from here. 

A more productive economy.
More resilient communities. 
More widely shared opportunities. 

Scale tells us how far we have travelled. Purpose must remain as our true north to a better future.

That, in my view, is the next measure of success for Islamic finance.

Bank Negara Malaysia
20 October 2026