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Assistant Governor's Opening Remarks at the High-Level Malaysia - Sweden Fintech Seminar 2017

Speaker: Encik Marzunisham Omar Venue: Sasana Kijang, Bank Negara Malaysia Language: English Speech Date: 16 Nov 2017

It is my pleasure to welcome all of you to the inaugural High Level Malaysia – Sweden Fintech Seminar 2017. To our friends from Sweden and other countries, Selamat Datang to Malaysia.

Bank Negara Malaysia is pleased to collaborate with the Embassy of Sweden and Business Sweden in hosting this event. We hope that it is but the first of more partnerships to come. Today we have a diverse mix of professionals and thought leaders with us - entrepreneurs, bankers and fellow policymakers from across ASEAN, the Middle East and Africa. I have no doubt that this distinctive gathering of minds will enrich the discourse on fintech - in particular, how we may work together to truly realise fintech revolutionary potential for financial services.

My remarks today will touch briefly on three areas. First, our motivation for advancing the fintech agenda. Second, our approach in supporting its growth and development. Finally – and crucially - the key focus areas in Malaysia that are ripe for greater strategic collaboration and partnership with our global counterparts.

Few would disagree that technological assimilation has always been a double-edged sword, whatever the industry may be. On one hand, the beating heart of progress, on the other, the looming spectre of obliteration. Banking and finance is no exception to this dictum. With the explosive wave of fintech in recent times, the financial sector is today presented with a new inflexion point in the adoption of technology. High speed computing, proliferation of mobile devices, the ubiquity of the internet - these are but a few potent forces that will continue to push the frontiers of innovation. It is rational to expect fintech companies to continue to pioneer novel business models, and further disrupting the financial sector. Incumbent players can only expect greater market competition in the years to come.

It is often said that “Digital is a state of mind.” Indeed. Technological progress affects all - the way we communicate, the way we work, the way we live. Implicit in this are changing consumer expectations on how and when they should be able to conduct financial transactions. In a recent survey conducted in the US, it was revealed that 54% of Millennial account holders would be willing to switch financial institutions to get a better digital experience. At the same time, they are also demanding more personalised and customised communication than ever before. Clearly, in this era of tech-savvy consumers, the ability to deliver a seamless, bespoke customer experience is a key differentiation strategy that can determine the long term sustainability of financial services providers.

Bank Negara Malaysia is a strong proponent of technological adoption within the financial sector. We see technology as a key imperative for greater efficiency and effectiveness of the financial sector. This is a philosophy embodied in both our ten-year financial sector masterplans. Consistent with this, our motivation for promoting fintech is centred on a four main thrusts:

  • First, greater customization. Fintech possesses the distinct potential to provide higher value add and more customer-centric services. The evolution of biometric technologies, big data and predictive analytics for example will enable financial service providers to generate deeper insights into customer wants and needs.
  • Second, greater financial inclusion. Fintech is a powerful tool to reach presently underserved communities. M-Pesa in Kenya, the use of biometric in India to validate customer identities and the use of robo-advisers are but few examples of how fintech has enabled finance to be extended to market segments which are untapped, or that would not otherwise be cost-effective.
  • Third, greater market efficiency. Fintech brings with it the opportunity to improve market and system efficiency for back-end operations. A prime example is Distributed Ledger Technology (DLT), a means of enhancing efficiency and transparency in data sharing. Additionally, the use of predictive analytics may facilitate real time risk simulation and management.
  • Last but not least, greater automation. An often overlooked aspect is the ability to create more strategic value out of compliance through fintech. This is achieved mainly by automating compliance tasks, and subsequently reducing resources and operational risk associated with fulfilling compliance and reporting obligations. For instance, the use of artificial intelligence has enabled AML/CFT due diligence to be undertaken more efficiently by scanning internal data and unstructured data from the internet for information on individual profiles.


As with any new endeavour, there is an element of risk involved. As regulators, it is important that financial regulations appropriately harness innovation in a way that maximises its benefits whilst minimising the risks for the financial system and the economy.

In Malaysia, one of the ways in which we have ensured this is through the implementation of the Fintech Regulatory Sandbox Framework. Regulatory sandboxes provide tailored regulatory environments for fintech experimentation to be carried out in a live environment with corresponding safeguards in place. This has allowed us to apply regulations to a proportionate degree - one that fosters innovation while allowing regulators to remain vigilant to consumer protection and financial stability risks.

Since the implementation of the framework a year ago, we have accepted six (6) innovative solutions to be tested in the sandbox. These solutions seek to offer new methods for a range of services - Comparative insurance product information, peer-to peer currency exchange models, e-money remittance services and e-Know Your Customer (e-KYC) for customer on-boarding. All these solutions contain a potentially compelling value proposition for improving financial services in Malaysia, particularly in three areas:

  • Improving the accessibility, efficiency, security and quality of financial services;
  • Enhancing the efficiency and effectiveness of risk management processes; and
  • Address gaps in, or open up new opportunities for, financing or investment in the economy.

I strongly encourage more financial services providers with fintech solutions to take advantage of our regulatory sandbox.

The sandbox is as much a learning experience for participants as it is for us - it functions as a useful evidence-based tool for keeping our regulations up to date with innovation. Work is also underway to develop relevant policies in relation to e-KYC for remittance and product aggregators.

Going beyond regulations, we have also identified and embarked on several critical enablers in supporting a vibrant fintech ecosystem. These include innovations in digital identity for customer on-boarding, the application of distributed ledger technology to trade finance, open Application Programme Interface (API), cybersecurity and cloud services. Several industry working groups have been formed to develop proposals in these areas for implementation in the financial sector.

Technology is reshaping various aspects of the financial industry. The speed of fintech development is fast outstripping our ability to adapt. In this environment, agility is a crucial trait, but so is synergy. It is imperative that we seek to learn from and work with partners possessing complementary strengths, establishing a symbiotic relationship that may create a sum greater than its parts.

I am therefore very much looking forward to hearing the insights of our Swedish counterparts in their journey towards becoming a digital nation. Already an established pioneer in various other industries, Sweden’s famed innovative spirit carries on to the fintech space. Today, we have the privilege of observing, and learning from, some of Sweden’s most cutting-edge solution providers. It is worth noting that Stockholm has one of the highest number of companies with unicorn status per capita globally, with only Silicon Valley bypassing this amount by a small margin.

Malaysia is similarly seeing exciting developments in the fintech space. With a population over 30 million strong and a large proportion of digital-savvy consumers, the prospects for fintech adoption and innovation in Malaysia are promising. More and more start-ups and financial institutions are exploring collaborative approaches to unlock potential synergies in fintech through the creation of various accelerator programmes, incubators and innovation labs. There are also strong collaboration networks in the public-private space: Partnerships between industry players and authorities such as Bank Negara Malaysia, the Securities Commission, the Malaysia Digital Economy Corporation and the Fintech Association of Malaysia, continue to ensure a conducive, vibrant environment for innovation. Looking beyond our shores, we also hope to play a role as an effective test bed for fintech solutions in collaboration with our ASEAN partners.


Allow me to conclude my remarks with a brief quote – “If you want to be incrementally better - be competitive. If you want to be exponentially better - be cooperative.” I thought the quote is a fitting coincidence for today’s context - Our best and most important work are not those attributed to any one individual, but those that are achieved together as a team.

As digitalisation continues to transcend traditional boundaries, I strongly believe that the path ahead is one of collaboration and partnership. I hope the sessions today will inspire new ideas and perspectives on how we may bring about greater progress by taking financial intermediation to the next level through technology.

Thank you.


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