In October last year, the central bank issued the Financial Technology Regulatory Sandbox Framework for financial institutions and fintech players.
KUALA LUMPUR: Bank Negara Malaysia plans to engage the public to get their ideas or wish list on what aspects of the financial services that can be improved using technology.
The bank’s Financial Technology Enabler Group (FTEG) chairman Aznan Abdul Aziz said it was initiating a call for participation known as “Fintech Hacks”.
“This initiative is for the public to submit their innovative ideas through our various electronic channels for the improvement of the financial services sector,” he said on Monday, the first day of the two-day Finnovasia KL conference in Kuala Lumpur.
Presenting his opening remarks at the financial technology (fintech) event (the text of which was emailed to StarBiz), he said there were several other related activities in the pipeline to be launched this year.
Last year, Bank Negara issued the Financial Technology Regulatory Sandbox Framework for financial institutions and fintech players to experiment with new solutions in a live, contained environment within specified parameters and timeframes. The framework came into effect on Oct 18, 2016.
Aznan said the central bank must balance between safeguarding financial stability and promoting innovation and growth in the introduction of fintech.
However, he stressed that Bank Negara was open to new innovation and to making new regulations or revising current ones.
“The regulatory sandbox that was issued in October 2016 clearly reflects our openness in facilitating value-added and meaningful innovation,” he said.
“With the sandbox, we are willing to ‘flex’ rules and regulations to enable testing where we deem that the solution contains strong value proposition and the risks can be appropriately contained. This will also allow us to reduce time to market for new innovative products, which under normal process might get stifled by regulatory hurdles.
“It enables us to ensure that our regulatory framework is relevant and responsive to innovations that can bring game-changing outcomes to our financial services sector.”
Another myth he dispelled was there would be regulatory status quo after the sandbox.
“For us, one of the underlying principles of the sandbox is also to allow us to monitor and assess whether measures and safeguards in place are adequate to address the risks posed by the innovative solution. We are open to create new regulations or amend existing regulations to allow for such solution to be offered in the market under licensed regimes.”
He said the sandbox allowed it to learn from innovators and adapt to new and emerging risks emanating from the offering of new solutions.
He also noted that fintech company did not need to collaborate with financial institution to participate in the sandbox.
“Our sandbox allows for a stand-alone fintech company to test its innovative solution as long as it is able to prove that it meets the eligibility criteria and that it has appropriate measures and safeguards in place,” Aznan said.
“In fact, most of the innovative applications received for the sandbox are indeed from the fintech companies. Having said that, fintech companies that collaborate with financial institutions could gain an added advantage from guidance and support provided.”