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BNM: Malaysia an ideal test bed for fintech growth [Islamic Fintech Dialogue 2017]

10 October, 2017

 

 

KUALA LUMPUR (Oct 10): Malaysia, with its diverse population of 31 million and growing middle class, stands as an ideal "test bed" for developing and commercialising financial technology (fintech) solutions, says Bank Negara Malaysia (BNM).

BNM assistant governor Marzunisham Omar said this is further strengthened by the high mobile and internet penetration rate of about 141% and 81% respectively in the country.

"The emergence of fintech has opened up new opportunities which can greatly benefit the financial industry," Marzunisham said in his opening remarks at the Islamic Fintech Dialogue today.

"At its core, fintech has led to the creation of various business models that help improve and simplify financial transactions, which 10 or 20 years ago seemed impossible," he said.

In this regard, Marzunisham said it is time for Islamic finance to ride on the fintech wave, adding that by 2020, digital banking consumers in Asia alone are expected to reach 1.7 billion from the current estimated 670 million.

"First, by leveraging on technology, industry players are able to create more value and customer focused services. This can be achieved through the delivery of customised solutions using for example biometric technologies, big data and analytics," he said.

Marzunisham said technologies such as Application Programme Interfaces (or APIs) could bring substantial benefits to customers, by making banking transactions simpler, quicker and more convenient.

"Second, the adoption of technology can help Islamic finance reach out to market segments which would not otherwise be cost-effective. This means a great opportunity to serve untapped markets," he added.

"Third, in terms of processes, fintech can assist to improve the efficiency of back-end systems and operations, including through the use of predictive analytics to undertake real time risk management."

Marzunisham pointed out that Islamic finance fintech is still in its infancy and growing. Still, the number of fintech start-ups, innovation labs and incubators that are based on the values and principles of Islamic finance are on the rise, although "not as visible and omnipresent as their conventional peers".

"In Malaysia, our Islamic financial institutions are in a good position to benefit from the growth multipliers that fintech offers. What is required is for the industry to invest in technology and talent to accelerate the adoption of technology," he said.

Marzunisham said that to make this a success, industry leaders and practitioners need to "transform their fears into familiarity, to embrace the digital transformation to re-engineer the entire organisation".

Likewise, the tone has to be set from the top, he noted, whereby industry players can make the necessary operational, structural and cultural shifts.

"The innovation agenda must be a boardroom priority, and Islamic financial institutions must be willing to allocate capital and resources to make this work. A further imperative to this is to inculcate and infuse a culture of innovation permeating throughout the organisation," he said.

"Of importance, Islamic financial institutions must be open to rethinking their traditional business models and approach to doing business. In particular, the openness to forge digital partnerships and strategic alliances has the potential for the co-creation of innovative solutions," he added


Original Source: http://www.theedgemarkets.com/article/bnm-malaysia-ideal-test-bed-fintech-growth

 

 

 


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