Steps to scaling the priority digitally

PETALING JAYA: Bank Negara has set out its priorities to create the right conditions for the Malaysian financial sector to capitalize on digitalization while ensuring that the associated risks are well understood and effectively managed by financial institutions.

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

“Enabling competition and innovation will therefore be a key objective. This will see the introduction of new digital players, as well as improved 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 trade-related solutions, alternative finance, social finance and sustainable finance,” he said. she told Bernama in an email interview after the recent launch. of the Malaysian Financial Sector Master Plan 2022-2026.

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

She said the bank also aims to future-proof key infrastructure that serves as the backbone of the digital economy, including ensuring that real-time payment systems, data infrastructure and standards can meet a wide range of players and use cases in the financial industry. sector.

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

It also reflects the current landscape, which is becoming more diverse, she added.

Continuing his developments, the Governor noted that, like many central banks around the world, Bank Negara 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.

“It remains unchanged. We are also taking it a step further by experimenting with Central Bank Digital Currencies (CBDCs) over the next few years. After all, there’s no better way to keep up with something new than to try it out ourselves.

“It’s a really exciting space, with lots of promising ideas and lots going on. But I want to be clear that we don’t just want to get caught up in all the hype and buzz.

“Therefore, in our exploratory efforts, we will prioritize use cases that have higher benefits for Malaysia.

“This is consistent with our approach to digital innovation. We do not promote technology for its own sake. On the contrary, it must bring tangible benefits to the economy.

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 only became widespread following the pandemic.

Whether it’s remote work, buying food, or shopping, more and more people are used to being able to do these things anytime, anywhere, with the click of a button.

“Since the pandemic, these behaviors have only become more common.

“So we want Malaysians to have digital options in finance.

“Some examples are fully digital claims experiences for insurance and takaful, and seamless payments for everyday transactions.

“Let’s be clear, it’s not about forcing customers to go digital. It’s about giving people choices.

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

The central bank launched the master plan in January, predicting that it would incentivize the financial sector to be nimble and resilient to support the country’s transition to its next stage of development.

He identified five priorities to anchor his efforts to promote a financial system that would ensure long-term growth, planetary health and shared prosperity.

The priorities are to finance Malaysia’s economic transformation, improve the financial well-being of households and businesses, advance the digitalization of the financial sector, position the financial system to facilitate an orderly transition to a greener economy and to advance value-based finance through thought leadership in Islamic finance.