KUALA LUMPUR: Bank Negara Malaysia says the financial technology (fintech) regulatory framework will be ready by July.
Its Governor Datuk Muhammad Ibrahim said on Thursday: "We want to push it through by July so that the banking institutions have time to comment on it.”
Speaking on the sidelines of the 20th Malaysian Banking Summit, he said the comments from the banks would make the regulations more effective when it comes to the time to implement them.
In his keynote address, Muhammad said the framework for fintech firms was to test innovations in the financial services operational environment.
Indeed, BNM has long recognised the power of technology in driving the financial sector forward, he said.
“Over the years, banks have harnessed the power of technology to reap significant benefits. Bank Negara has supported this development on many fronts including in the areas of payments, internet banking, agent banking, Islamic finance and money exchange and remittances. Fintech will be a new addition to the list,” it said.
Muhammd said fintech developments such as blockchain, artificial intelligence and biometric applications are now expanding the frontiers of banking.
“Because of the profound implication of new technology, we require a re-think of the regulatory framework in addressing consumer protection and market conduct issues as well as the technological impact on the orderly functioning of financial markets.
“We expect that the framework would enable fintech firms to provide regulated financial services directly to the public, or in partnership with financial institutions, and to operate under more flexible regulatory arrangements.
“We take cognisance that some innovations cannot be achieved within existing regulatory parameters. Nonetheless, to protect the interests of consumers, this will be subject to certain safeguards. The innovation must provide a clear benefit to the general public or financial industry. A firm that operates within the framework must also commit to observe reasonable standards of service, transparency to customers, appropriate funding and reporting requirements.
“These are not meant to stifle the creative process at play, but rather facilitating an orderly process while protecting consumers interests and maintaining market confidence.
“The Bank also expects the framework to deliver a number of key benefits. It will provide regulatory clarity for fintech start-ups, and for banks and consumers that use their services. It will also lower barriers to entry and accelerate the time-to-market for productive innovations.
“Our aim is therefore to support fintech firms that go on to upscale their activities, and aid fintech firms to better anticipate and adjust to appropriate regulatory expectations,” said Muhammad.