Undoubtedly, it must compete and present a viable alternative to the conventional insurance. At the same time, it has a unique value proposition that can meet the Muslim demand and Shariah requirements. The sustained demand for takaful, especially among Muslims, has contributed towards the industry’s steady growth – from 3% market share a decade ago to almost 18% in 2018. The growth potential for takaful industry remains clear and promising. In 2018, almost half (45.8%) of the Malaysian population have yet to obtain protection. Based on a recent demand survey, 46% of Malaysian households and 48% of businesses responded that they are unaware about the comprehensive range of solutions that the takaful industry is able to offer. To reduce this gap, as an industry, takaful operators must collectively elevate the prominence of takaful and its capabilities to be a solution of choice for Malaysians. I wish to suggest three pathways for this aspiration to be realised: First, by offering good value solutions to customers; Second, by adopting innovative tools and effective distribution strategy; Third, by inculcating sound understanding of financial protection and prudent financial behaviours among Malaysians. Allow me to elaborate on these . Firstly, the takaful industry has the advantage of a business model that is grounded on the values of mutual assistance and solidarity. Unlike insurance, which is premised on the buying-and-selling of risks at a premium, takaful advocates 2/5  BIS central bankers' speeches  for value propositions that consumers are likely to find unique and take comfort in.

These are probably the most important services for the majority of customers. Several banks also offer trading in shares and fund units on the Internet. The product range and user-friendliness can be expected to increase in the period ahead. I’m sure discussions during this conference will give you an indication of future product developments. 9  BIS Review 78/2000  Nordic countries rank at the top globally in terms of access to the Internet. Nordic banks thus have a unique opportunity to serve a substantial share of customers via the Internet. This also has relevance to cross-border integration. Banks that focus on Internet distribution are perhaps particularly interested in markets where there are many Internet users. Although estimates vary, it is safe to say that the Internet will significantly reduce the banks’ variable costs. However, substantial IT investments may be necessary to keep pace with technological and market developments. In isolation, this may contribute to increasing banks’ fixed costs. As a result, the competitive environment may change. There is a danger of over-investment. Sunk costs account for a large share of overall costs. This may lead to marginal pricing as the fight for volume intensifies. This could have a negative effect on bank profitability. Many Nordic banks have a smaller customer base for distributing fixed costs than large foreign competitors. As mentioned, some banks have tried to compensate by entering into cooperation agreements. However, it might be difficult to reduce total costs without a substantial reduction in the costs of more traditional distribution.