Bank Negara Malaysia has been actively engaging with financial technology (fintech) firms to better understand their activities and provide guidance on the regulations that may apply to them.
Newly-appointed Governor Datuk Muhammad Ibrahim said rather than looking at the fintech revolution as unwelcoming, financial institutions ought to embrace it as an opportunity.
"Fintech is challenging the status quo of the financial industry. New business models will emerge. Delivery channels will challenge existing norms.
Transaction costs will be reduced.
"In the area of payment services for example, e-payment has revolutionised payment mechanisms through convenient and accessible channels," he said in his keynote address at the Global Islamic Finance Forum 5.0 here today.
In the Islamic finance industry, Muhammad said, the Investment Account Platform (IAP) that was launched in February is an important example of a collaborative strategy by the industry to bring game-changing innovations to the market.
"The IAP is the first Islamic banking-intermediated internet-based platform that combines the expertise of Islamic banks and efficiency of technology to channel funds from investors to viable economic ventures.
"The platform has strong prospects to support cross-border investments and increase global connectivity through the participation of banks worldwide," he said.
According to a McKinsey Research Report, an estimated 10 to 40 per cent of overall banking revenues could be at risk by 2025 due to fintech innovations outside banking institutions that are able to achieve a significant pricing advantage.
Muhammad said in Islamic finance, like the IAP, fintech has immense potential to be the next game changer, offering opportunities for industry players to adopt digitisation strategies that will be able to deliver much greater scale or alternatively, a high degree of specialisation.
He said it also opens up new possibilities for improving efficiency, reducing wastage and enhancing the customer experience, all of which adds up to stronger market positioning and financial performance.
"The adoption of fintech is clearly not without risks, particularly in the wake of rising cybersecurity threats that could compromise safeguards that protect financial assets and customer data," he added.
He said the central bank has commenced a review of the changes and additional guidance needed to ensure that the regulatory framework remains appropriate to manage the risks, while encouraging productive innovation that would drive costs down and improve the quality of service to consumers.
"We are looking at this from several perspectives: first, the impact of fintech strategies on the management of risks by financial institutions; second, the potential for fintech start-ups to introduce new risks to the broader
financial system as a result of regulatory arbitrage; and third, the impact to consumers.
"We will be providing more information to the market on our approach to the regulation of fintech developments as our review progresses.
"In the meantime, our engagements with individual firms will continue, supported by dedicated resources within the Bank to lead the review," he added.
Bernama
Wed May 11 2016
![BNM actively engaging with Fintech firms, says governor BNM actively engaging with Fintech firms, says governor](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/http://img.astroawani.com/2015-06/71435469142_ISLAMICBANKING.jpg)
Fintech is challenging the status quo of the financial industry. New business models will emerge. Delivery channels will challenge existing norms. - File Photo
10 Berita Pilihan - (16 Julai 2024
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