Digital gold to pave Bank Rakyat’s venture into Shariah wealth management

Malaysia’s Bank Rakyat is leveraging on its Shariah compliant digital Akaun-i eGold platform and broader gold ecosystem to diversify beyond its predominantly retail clientele base – seeking to grow its wealth management portfolio.

“The Akaun-i eGold ecosystem allows us to engage younger, digitally-savvy investors while building a foundation for diversified income streams,” Chief Retail Banking Officer Khairudin Abdul Rahman shared with IFN Investor. 

This strategic push builds on its domestic market-leading Ar-Rahnu business, which currently commands 61% of Malaysia’s gold pawnbroking market. “We have a long-term plan to digitize the Ar-Rahnu pawnbroking business. But before doing that, we needed a digital gold platform.” 

Khairudin explained that the group already handles significant amounts of gold transactions – with security being an issue when transporting gold for customers to buy physically. The shift to a platform is aimed at mitigating operational and customer risks through digitalization. 

Another advantage is the improvement of price risk management as the platform lets users lock in gold prices for up to three minutes before finalizing a purchase or sale – to protect against sudden market fluctuations during volatile economic periods. 

Beyond making gold investment more accessible by allowing users to invest in small values, the platform features instant transactions and 24/7 access – catering to a broader demographic and democratizing gold investment, noted Khairudin. 

“AI-driven algorithms can analyze vast amounts of market data to identify patterns and predict price movements, enabling investors to make more informed decisions and optimize their trading strategies.” 

Already handling significant transaction volumes on a monthly average for retail and pawnshop clientele, Khairudin foresees a need to expand on its outsourced bullion custody operations – as Bank Rakyat aspires to continue its same-day delivery of physical gold for redemptions. Its other subsidiary, Rakyat Management Services Gold, is also involved in physical gold sales.   

In terms of future expansion into more precious metals, Khairudin said, “We plan to explore other items, for example silver. In the domestic Malaysian market, silver circulation is actually higher than gold.” 

The banking group is also focusing on growing its fee-based income segment of servicing institutional and high net-worth clients. Established in 1954, with a 4.4 million retail client base currently, Bank Rakyat is ready to boost its 20% affluent customer base as more account holders transition up the value chain, added Khairudin. 

“Demand for gold investment has recently increased. Institutions and large investment funds continue buying gold as a hedge tool. This trend is driven by global economic uncertainty and inflation.”