KUALA LUMPUR: Bank Negara Malaysia (BNM) is close to concluding the concept paper on financial technology (fintech) which will serve as a guideline for financial institutions to boost innovation and improve the delivery of financial services.
“Our concept paper is almost ready,” said BNM governor Datuk Muhammad Ibrahim. “We have received feedback from the industry. We will finalise it and use it as a guideline.”
“We are happy to complete it within [the] stipulated timeline,” Muhammad told reporters after delivering his opening address at the Global Symposium on Innovative Financial Inclusion forum yesterday. He was previously reported as saying that the fintech guideline was expected to be ready by the fourth quarter of this year.
Last July, the central bank issued a discussion paper to seek industry players’ feedback, in order to facilitate the development and adoption of innovative fintech solutions in the financial sector. It introduced a trading platform and fintech regulatory sandbox to enable interested parties to test their innovations.
The sandbox is a concept by global regulators to provide a “safe space” for new businesses or technologies, to test innovative products, solutions and business models, said Muhammad.
In his opening address, the governor said technology breakthroughs, combined with mobile devices, present significant opportunities to scale up financial inclusion.
He pointed out the importance of the new products, delivery channels and technologies to work well with senior citizens, as they are financially excluded.
“Many financial products and services offered today have age limits that create barriers to access financial services,” he said.
Muhammad said regulators should focus on identifying and working on their blind spots to drive efficiency gains, in order to promote sustainable financial inclusion.
“Ultimately, the provision of financial services to the underserved and unbanked must be economically viable for providers,” he added.
Meanwhile, World Bank Group (WBG) finance and markets global director, Sebastian Molineus, urged banks and other financial institutions to actively harness technology to enhance product offerings and improve efficiency.
“We believe fintech companies will continue to challenge traditional financial institutions, disrupting and even displacing some of them,” said Molineus.
In his keynote address, he also said that many financial institutions are setting up innovation labs and collaborating with or buying fintech companies.
Molineus said the WBG views fintech as a transformative force that can help fill many of the gaps in terms of financial inclusion.
A growing number of smaller and focused fintech companies are entering the new market, in order to either provide specific finance solutions such as factoring small- and medium-sized enterprises (SMEs), or be in a support function as part of the larger ecosystem of data analysis, security and verification services, he said.
The benefits of fintech for consumers and financial institutions are shorter and speedier transaction chains, greater capital efficiency as well as stronger operational resilience.
According to the WBG 2014 Findex data, two billion people worldwide are still financially excluded, of which 1.1 billion people are located in Asia. In addition, about 200 million SMEs around the world have no access to credit.