‘Cannibalise to digitalise’


Nor Shamsiah: Ultimately, fintech in Malaysia should be harnessed to offer inclusive, sustainable and relevant financial products.

KUALA LUMPUR: Banks embarking on digital transformation must be willing to cannibalise their own business to become successful, according to a financial technology (fintech) commentator.

Chris Skinner, chief executive officer of UK-based fintech and financial markets blog, The Finansier, said banks need to employ individuals that could “destroy the business”.

“Financial institutions that want to digitise need to be able to cannibalise,” he said at a panel discussion in the MyFintech Week 2019 conference which kicked off here yesterday.

According to Skinner, some banks, like Spain-based BBVA, employ “chief cannibal officers.”

“One focuses on external cannibalisation of the business – to find, invest and partner with other companies; while another is tasked at handling internal cannibalisation – to ask questions on why the bank is doing what they do.”

The point of “cannibalisation” is essentially to identify the bank’s weak points before a competitor exploits them, said Skinner.

MALAYAN BANKING BHD (Maybank) group president and chief executive officer Datuk Abdul Farid Alias, who was moderating the panel discussion, concurred that such a method would prove fruitful in paving the way toward digitalisation.

He said internally, Maybank had teams that focused on trying to identify each other’s weaknesses.

“It creates competition,” said Abdul Farid.

Citing The Bali Fintech Agenda, a framework on policy issues surrounding fintech, International Monetary Fund financial counsellor and director Tobias Adrian said there were five crucial areas that need to be addressed as financial institutions embark on digitalisation. “These areas are cyber risks, regulatory standards, payment space, e-money (crypto and digital currency) and data,” he said.

Meanwhile, Bank Negara governor Datuk Nor Shamsiah Mohd Yunus described fintech as a means to enhance competition, increase productivity and fundamentally change the way institutions provide financial services.

She said technology could present significant opportunities to reduce the cost of financial intermediation and expand access.

“For example, distributed ledger technology could enable automated execution of contracts through the use of digital protocols or smart contracts, which can simplify complex syariah contractual processes,” she said in her opening speech at the event.

Nor Shamsiah added that the integration of social finance into Islamic financial services encouraged wealth distribution among society to achieve a greater balance between wealth creation and wealth sharing.

“Ultimately, fintech in Malaysia should be harnessed to offer inclusive, sustainable and relevant financial products and services to serve the needs of all,” she said.

Nor Shamsiah noted, however, that there was a need to be cognisant of the potential risks associated with technology.

“This would be especially important as fintech and big tech firms become more prominent in the financial system.

“Such firms could pose system-wide vulnerabilities that could amplify shocks to the financial system and cause financial and economic instability.”

The MyFintech Week 2019 conference, Malaysia’s flagship fintech event, is being held until June 21 in conjunction with Malaysia Digital Economy Corp’s Malaysia Tech Week 2019.


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