Regulatory framework for Fintech to be out in Q4, says Bank Negara

KUALA LUMPUR, July 20 — The regulatory framework to enable the adoption of financial technology (fintech), which is expected to be released by the final quarter of this year, will create an environment for financial innovation to prosper.

Bank Negara Malaysia (BNM) Governor Datuk Muhammad Ibrahim said the central bank has established a Financial Technology Enabler Group to formulate and enhance the regulatory framework to facilitate the adoption of technological innovation in the Malaysian financial services industry.

He said BNM would come out with a consultative paper on fintech this month, seeking industry comments and feedback on the said framework to ensure its effectiveness when finalised.

As to whether there is any proven framework that it will benchmark against, he said the central bank would “keep an open mind” and look at best practices adopted overseas as well as in the country.

“The various initiatives we have made on payment systems over the years are good examples of fintech,” he told Bernama in his inaugural media interview since his appointment as Governor on May 1, 2016.

He cited one good example of fintech adopted by several Islamic banks, the Investment Account Platform (IAP), which provides an online investment platform to secure funding for projects, linking individuals, companies and rating agencies.

“Islamic banks are ahead in introducing fintech and I am pleased that they are able to come together as a group for this platform,” he said.

Muhammad stressed that technology, which fosters strategic alliances among banks, entrepreneurs and service providers such as telecommunications companies, is the way of the future.

As espoused by Cisco and other industry observers, many are eager to ride on the bandwagon of fintech but then, effective cybersecurity and implementation of security safeguards are pre-requisites in capturing the digital value of financial services in Malaysia.

While security issues in banking institutions have been a pressing and paramount concern lately, Muhammad explained that this is one area where long-term benefits of implementing enhanced security features need to be seriously advocated.

“Investment for new security measures through new technology pays off and this is an ongoing process,” he said.

This, he said, includes improved and stricter security measures for Automated Teller Machines (ATMs) especially those located in high-risk areas.

He said the central bank had also issued a circular to all banking institutions to come up with substantive measures to improve the security of ATMs, including ink-staining technology. — Bernama