AS Malaysia moves towards becoming a high-income nation, financial innovation will play a crucial role in enabling inclusive and sustainable growth.

While conversations around financial inclusion often focus on access to banking, microcredit, or insurance, a lesser-known but equally important development is emerging quietly in the background: share-backed financing.

Put simply, share-backed loans allow investors to unlock liquidity from their existing stock portfolios without needing to sell off assets.

In doing so, they preserve long-term wealth while gaining access to short-term capital, whether to fund a business, manage personal cash flow, or seize timely investment opportunities.

This form of financing offers investors flexibility and choice, especially during times when traditional lending options may not be readily accessible. And because it's structured around assets the investor already owns, it creates a more efficient pathway to capital.

As someone working in the field of share financing, I've seen first hand how this model can bring meaningful benefits to Malaysians across different walks of life.

We've seen investors use it to get new businesses off the ground, to cover cash flow shortfalls during uncertain periods, and even to strategically reallocate funds while maintaining a long-term investment position.

These are real financial decisions, made by ordinary investors, who are simply looking for better tools to manage their wealth.

What's promising is that this model is gaining traction among not just high-net-worth individuals, but also retail investors, especially as more Malaysians participate in the stock market and build up equity portfolios.

The idea that your shares can work harder for you, without needing to be sold, is a shift that resonates with investors seeking both growth and stability.

This is especially significant given that Bursa Malaysia hit a new record of more than RM2 trillion in 2024 in equities market capitalisation.

If just 10 per cent of those retail investments were leveraged through regulated share-backed loans, it could translate into a substantial injection of liquidity into the local economy.

Such capital mobilisation has real multiplier effects, from funding new businesses to boosting consumer spending, all of which contribute to national economic growth.

In the context of Malaysia's broader economic ambitions, this matters. When investors have the tools to turn financial assets into productive capital, it can lead to stronger domestic investment, greater entrepreneurial activity, and more robust financial resilience.

At a time when small businesses need easier access to funding and individuals are seeking smarter ways to manage money, share-backed loans can play a complementary role alongside existing financial services.

When built on a Shariah-compliant foundation, it creates an ethical and inclusive offering for investors who want to align their financial decisions with Islamic principles.

This is a clear advantage for Malaysia, as we continue to innovate within a regulatory environment that supports both conventional and Islamic finance.

Of course, any financial innovation must come with safeguards. It is crucial that investors understand the mechanics and risks involved, including what happens if share prices move against expectations.

Transparency, investor education and responsible lending practices are key to ensuring that share-backed loans empower the people who use them.

The success of this model will depend on how well the ecosystem can balance innovation with protection.

Licensed financial providers must be held to high standards of compliance, data security, and ethical conduct. And as this space grows, it's important that regulators and industry players work together to evolve the guardrails around share financing in a way that fosters long-term trust.

Ultimately, the future of Malaysia's economy rests not only on macroeconomic strategies but also on the tools we give individuals to participate more meaningfully in financial growth.

Share-backed loans offer one such tool - one that's grounded in ownership, powered by choice, and positioned to support the aspirations of a new generation of investors.

In moving forward, we must ensure that financial innovation is not just about technology, but about relevance, giving people real options to improve their financial outcomes, and in doing so, creating ripple effects that support the wider economy.

*The writer is the head of operations of Saham2u. The views expressed here are her own.