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BNM fosters conditions for financial sector to upscale digitalisation

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KUALA LUMPUR: Bank Negara Malaysia (BNM) has set its priorities to foster the right conditions for Malaysia’s financial sector to capitalise on digitalisation while ensuring that attendant risks are well understood and managed effectively by the financial institutions.

Governor Tan Sri Nor Shamsiah Mohd Yunus said this reflected the rapidly changing technology landscape, making it almost impossible for anyone to predict the shape and form of the next waves of changes.

“Enabling competition and innovation will thus be a key focus. This will see the introduction of new digital players, as well as enhanced pathways to test and scale digital innovations.

“This will include efforts to help accelerate the growth of fintech (financial technology), especially Islamic fintech, such as for trade-related solutions, alternative finance, social finance, and sustainable finance,” she told Bernama in an email interview following the recent launch of Malaysia’s Financial Sector Blueprint 2022-2026.

Nor Shamsiah said, alongside this, the central bank would also put in place safeguards to preserve fair consumer outcomes and to manage risks to the system such as those related to cybersecurity.

She said the bank also aimed to future-proof key infrastructures that serve as the backbone of the digital economy and this includes ensuring that real-time payment systems, data infrastructures and standards can cater to a wide range of players and use cases in the financial sector.

This also reflects the landscape today, which is becoming more diverse, she added.

Elaborating further, the governor noted that like many central banks worldwide, BNM is paying close attention to the digital asset space, and the opportunities and risks that come with it.

As with any emerging development, the goal is to ensure that Malaysia continues to regulate and supervise to effectively serve the country’s monetary and financial stability mandates.

“That remains unchanged. We are also going one step further by experimenting with central bank digital currencies (CBDCs) over the next few years. After all, there is no better way to keep pace with something new than to try it ourselves.

“This is a really exciting space, with many promising ideas and a lot going on. But I want to be clear that we don’t want to simply get caught up in all the hype and buzz.

“Therefore, in our exploratory efforts, we will prioritise use cases that have higher upsides for Malaysia. This is consistent with our approach to digital innovation. We do not promote technology for its own sake. Rather, it must deliver tangible benefits to the economy.”

MORE DIGITAL-FIRST SOLUTIONS

The central bank, Nor Shamsiah said, would like to see more “digital-first” solutions in financial services as many aspects of life are now done online and digitally.

This has only become more widespread following the pandemic. Whether it is remote working, buying food or shopping, more people are used to being able to do these things anytime, anywhere, at the click of a button.

“Since the pandemic, these behaviours have only become more common. Thus, we want Malaysians to have digital options in finance. Some examples are fully-digital claims experiences for insurance and takaful, and seamless payments for day-to-day transactions.

“Let me be clear, this is not about forcing customers to go digital. Rather it is about offering people choices.

“Physical and hybrid options will still be available, but the point is that consumers and businesses who are ready for the technology should be able to benefit from it,” she said.

The central bank launched the blueprint in January, envisioning that it would drive the financial sector to be agile and resilient to support the country’s transition to its next stage of development.

It has identified five priorities to anchor its efforts to promote a financial system that would secure long-term growth, planetary health and shared prosperity.

The priorities are funding Malaysia’s economic transformation, elevating the financial well-being of households and businesses, advancing digitalisation of the financial sector, positioning the financial system to facilitate an orderly transition to a greener economy, and advancing value-based finance through thought leadership in Islamic finance. – Bernama




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