This article first appeared in Digital Edge, The Edge Malaysia Weekly on August 11, 2025 - August 17, 2025

Bank Negara Malaysia has published a discussion paper outlining its proposed approach to responsible adoption of artificial intelligence (AI) in the financial sector, as AI applications gain momentum across banks, insurers and e-money issuers.

According to the central bank’s 2024 AI survey, 71% of banking institutions and 77% of insurance and takaful operators have implemented at least one AI solution — up from 56% and 58% respectively in the previous year. More than 60% of financial service providers (FSPs) now view AI as a strategic priority.

FSPs are increasingly deploying AI across front-, middle- and back-office functions, particularly in customer analytics, fraud detection, operational efficiency and cyber risk management. Most projects are designed to support, not replace, human decision-making.

“In the context of AI, Bank Negara aims to facilitate and encourage responsible adoption and use of AI across the financial sector in a manner that will advance better consumer outcomes and our broader policy objectives. This means that while new innovations, such as AI, are given the opportunity to flourish, associated risks that may negatively impact system-wide stability, consumer outcomes and confidence in the financial sector will need to be managed effectively,” stated the central bank.

Bank Negara added it would maintain a technology-neutral regulatory stance, focusing on principles of parity, proportionality and neutrality.

Generative AI (Gen AI) is also gaining traction, with many FSPs exploring its use in improving internal processes. However, concerns remain over data privacy, cybersecurity risks, explainability and potential biases.

“Admittedly, Gen AI has introduced a new set of cybersecurity challenges for FSPs, particularly as bad actors increasingly exploit the technology for malicious purposes (for example, use of Gen AI to generate malicious software or AI-generated scripts). Moreover, Gen AI has enabled more sophisticated cyber threats, including deepfakes, advanced phishing scams and identity fraud that are harder to detect and defend. In response, FSPs have begun updating their internal controls to better manage these emerging threats.

“To conclude, as FSPs in Malaysia continue to explore the transformative potential of Gen AI, they are also becoming more attuned to emerging risks associated with this new technology. Many are taking a proactive, yet cautious stance. Customer-facing Gen AI applications remain limited, and FSPs have not yet indicated plans to explore Gen AI applications in financial risk areas. When implemented in a safe and responsible manner, Gen AI technologies can unlock meaningful gains for enhancing consumer outcomes and improving operational efficiency. A balanced innovation and risk management approach will be critical as the financial sector navigates the next phase of Gen AI responsible innovation.”

The central bank is calling on all stakeholders, including FSPs, government agencies, industry associations, technology service providers, consumer groups, non-governmental organisations and other interested parties to review the discussion paper and provide written feedback to [email protected] by Oct 17. The email must be titled “AI in the Malaysian Financial Sector: Feedback from [name of institution/individual]”.

Universiti Putra Malaysia (UPM) is among the first universities in the country to be equipped with direct 5G infrastructure by Digital Nasional Bhd (DNB), in support of its AI Sandbox initiative.

“The technology is expected to accelerate the implementation of research, the commercialisation of innovative output and the development of new technologies in the fields of AI, the Internet of Things (IoT) and automation systems, particularly in the agriculture and biotechnology industries,” said UPM vice-chancellor Datuk Dr Ahmad Farhan Mohd Sadullah during the signing of the memorandum of understanding (MoU) at Putra Science Park on Aug 4.

The AI Sandbox serves as a testbed for high-impact research and commercialisation, supporting use cases such as drone flight control, facial recognition and smart payment systems. Other projects include large language models, or LLMs, for rural communities.

The 5G infrastructure, provided in kind by DNB, allows UPM to carry out real-time data processing and advanced AI research. UPM will maintain and operate the system.

UPM has commercialised 262 of its 565 intellectual property assets, generating RM17.5 million in revenue, and nurtured 80 start-ups founded by its researchers and alumni, including Qarbotech Sdn Bhd.

The collaboration between UPM and DNB is expected to promote joint research, knowledge sharing and publications.

Peer-to-peer (P2P) financing platform microLEAP disbursed RM55 million in the second quarter of 2025, marking a 139% year-on-year (y-o-y) increase. Of the 70 investment notes issued, 69 were shariah-compliant, reflecting rising demand for ethical finance. The platform’s default rate stood at 0.4%, well below the market average of 4.18%.

This growth comes as the Malaysia Co-Investment Fund (MyCIF) recorded 4,464 micro, small and medium enterprises (MSMEs) receiving P2P financing in 2024 — a 24% increase y-o-y — despite its contribution falling from 13% to 10%. Private investor participation has helped fill the gap. Gross average investor returns stood at 16.8% per annum, excluding government-matched programmes.

“Heading into the second half of 2025, microLEAP will continue its regional growth strategy, expand its product suite and strengthen investor capabilities, while remaining focused on ethical and impactful financing,” said its founder and CEO Tunku Danny Nasaifuddin Mudzaffar.

To boost financial inclusion, microLEAP opened offices in Kelantan and northern Johor. The company is also expanding into Indonesia and the Philippines, targeting underserved areas such as Jakarta and Mindanao.

A new study by Kaspersky has found that 72% of organisations continue to use multiple cybersecurity vendors, despite the operational and financial burden this imposes.

The report, Improving Resilience: Cybersecurity Through System Immunity, reveals that 43% of security professionals find their current toolsets overly complex and time-consuming, hampering threat response.

“While diversification of security solutions can offer certain benefits, such as risk mitigation and coverage breadth, an unchecked increase in complexity often leads to significant resource drain and operational inefficiencies,” said Ilya Markelov, head of unified platform product line at Kaspersky.

Among the key challenges cited were overlapping tools (42%), lack of integration (41%) and inconsistent threat visibility (39%). These issues often result in budget overruns and create critical blind spots in threat detection.

Although only 28% have adopted single-vendor solutions, 86% of firms are moving towards platform consolidation, with 33% already merging their tools and another 53% planning to do so within two years.

Kaspersky recommends automated solutions like Kaspersky Next XDR Expert to address these inefficiencies and streamline threat detection.

Malaysia’s Generation Alpha is already reshaping financial literacy, with 97% of children born from 2010 onwards having access to a financial account, according to Mastercard’s latest report.

Nearly half use digital wallets (46%), investment accounts (40%) or debit cards (40%), and 50% of parents say their children are more financially savvy than they were at the same age.

“These findings highlight the remarkable pace at which Malaysia’s youngest generation is embracing digital finance. With 97% of Gen Alpha children already accessing financial accounts and nearly half using digital wallets, it’s clear they’re growing up with a strong digital-first mindset. This is a true reflection of Malaysia’s impressive momentum in digital transformation,” said Beena Pothen, Mastercard country manager for Malaysia and Brunei.

Digital wallets are already mainstream, with 62% of parents believing their children may never carry cash. However, 51% of parents find it increasingly complicated to teach financial literacy, and 79% want more tools to help.

Parents are interested in features like educational content (73%), parental controls (73%) and gamified experiences (42%), Mastercard found, adding that this opens opportunities for banks to create smarter, child-friendly digital solutions.

The $mart Cookies with $mart Wallets report also highlights Malaysia’s broader appetite for innovation, where 63% of consumers prefer modern payment options, far ahead of North America (25%) and Europe (24%).

The research was conducted by The Harris Poll, with 19,302 global respondents, including 1,010 in Malaysia.

Sunway iLabs and Cradle Fund Sdn Bhd have launched the Deep Tech Ventures Lab (DTVL), a six-month co-creation programme aimed at scaling science- and engineering-led start-ups tackling urgent global challenges.

Backed by innovation leaders from Malaysia, the UK, Australia and Singapore, the programme targets high-impact start-ups working in AI, energy transition, food and water security, and more. Twenty start-ups were selected from 69 applicants.

“DTVL embodies our vision to drive deep tech innovation that delivers both commercial success and meaningful societal impact,” said Matt van Leeuwen, chief innovation officer of Sunway Group and CEO of Sunway iLabs.

Participants will benefit from mentorship, investor-readiness sessions and global market access, culminating in a pre-demo day in September and a final showcase later in the year.

“This is exactly the kind of bold, future-forward initiative our ecosystem needs,” said Cradle CEO Norman Matthieu Vanhaecke.

Partners include Deep Tech Labs (UK), Investible (Australia/Singapore), CloudMile, MRANTI and Malaysian universities. The initiative supports Malaysia’s goal of becoming a regional hub for deep tech innovation.

Payments Network Malaysia (PayNet) has joined the Massachusetts Institute of Technology’s (MIT) FinTechAI@CSAIL as its sole Malaysian founding member.

“This collaboration allows us to contribute to AI advancements that are ethical, inclusive and resilient, which will define the next generation of financial systems globally,” said Farhan Ahmad, group CEO of PayNet.

The initiative, led by MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL), brings together global financial institutions, researchers and regulators to shape responsible AI applications in finance. Areas of focus include fraud detection, cybersecurity, customer experience, governance and data utilisation.

“We’re integrating AI into the core of our national payments infrastructure, strengthening fraud analytics, enhancing operational resilience and accelerating digitalisation,” said Farhan.

“Together, we aim to develop intelligent, trustworthy and transformative fintech AI solutions that can shape the future of global finance,” said CSAIL director Prof Daniela Rus.

PayNet’s commitment to ethical AI extends to initiatives like Program Akar with Microsoft and a research partnership with Imperial College London on AI governance. It also deploys real-time AI-driven risk monitoring in its DuitNow ecosystem.

The rising trend of “polyworking” — juggling multiple income streams simultaneously — among Gen Z is fuelling a wave of cybersecurity threats, according to Kaspersky.

The cybersecurity firm detected more than 6.1 million attacks disguised as work tools between the second half of 2024 (2H2024) and 1H2025, alongside phishing scams targeting job platforms like LinkedIn, Indeed and Glassdoor.

“For Gen Z, working one job is no longer the norm, it’s an exception,” Kaspersky stated, warning that the complex digital environments they manage daily expose them to significant risk. Each role brings more tools, from Zoom to Slack, creating more attack surfaces for cybercriminals.

Between July 2024 and June 2025, Zoom was the most spoofed platform with 3.8 million attack attempts. Microsoft Excel, Outlook and Teams were also top targets.

“When your calendar is packed with tasks from three different jobs and you have notifications coming in from five separate apps … it’s only a matter of time before something slips,” said Evgeny Kuskov, security expert at Kaspersky.

To raise awareness, Kaspersky launched Case 404, an interactive cyber-detective game that helps Gen Z recognise hidden online dangers and learn how to protect their digital lives. It teaches users to detect phishing threats and avoid common pitfalls like poor password hygiene, fake software updates and shadow IT.

A humanoid robot showcasing football skills at the Robot Mall, the world’s first embodied intelligent robot 4S store in Yizhuang district, Beijing, China, on Aug 4. The facility is scheduled to open in a robotics industrial park in Yizhuang, located in southern Beijing, during the 2025 World Robot Conference from Aug 8 to 12.

The GameSir X5 Lite is a compact, plug-and-play USB-C mobile controller designed for USB-C-enabled iPhones (including the iPhone 15 and 16 series), Android smartphones and devices with a width of up to 213mm such as the iPad Mini.

Weighing about 135g, the controller features a spring-loaded sliding bridge that securely grips the device, while rubberised pads ensure a snug and comfortable fit. Its ergonomic and lightweight design allows for extended use without fatigue. The X5 Lite uses GameSir’s Hall Effect sticks — a magnetic and semiconductor-based system that ensures precise, anti-drift analogue control for consistent gameplay accuracy.

The controller offers seamless connectivity and wide compatibility with a range of mobile devices and platforms. It is fitted with cushioned and durable membrane triggers and buttons for responsive control, as well as a turbo function for enhanced gameplay during rapid-fire actions.

Additional features include pass-through charging for uninterrupted play and software customisation through the GameSir mobile app (currently available only on Android). The X5 Lite is available at gamesir.com, priced at US$34.99 (RM148).

How did we end up here, masters of scientific insight, purveyors of ever more powerful technologies, astride the burning planet that created us, and now responsible for cleaning up the mess and determining the future direction of all of life? And what do we do about it?

Technology is Dead is a book that attempts to answer both of those questions. It is a book of both challenge and hope, written for those who are able or willing to lead us out of our global predicament. It is a book for everybody: politicians, CEOs, community leaders, everyday parents and young people who understand that we must change our ways to ensure a sustainable future for all living things and the planet we rely on. — Amazon

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