Banking in the digital age


The Financial Sector Blueprint 2022-2026 has five strategic thrusts, namely, 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.

PETALING JAYA: Industry observers have welcomed Bank Negara’s new five-year plan for the financial sector, which seeks to promote a financial system that offers long-term growth, planetary health and shared prosperity.

The Financial Sector Blueprint 2022-2026 is expected to shape a financial sector that is not only focused on increasing the returns to shareholders, but also in lending a hand to create a more equitable society.

An analyst said the key priorities of the new plan is “well thought out.”

“However, it all boils down to the implementation and the kind of measures that will be introduced under the new blueprint.

“Covid-19 has changed people’s expectations with regard to the financial sector. Measures under the new blueprint must respond to these expectations,” he told StarBiz.

The Financial Sector Blueprint 2022-2026 has five strategic thrusts, namely, 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.

Tengku Zafrul: “Now that our national goals are set and the blueprint is drawn, it is time to act. “This year will not only be a pivotal recovery year for Malaysia, but also a rare opportunity to reform and future-proof ourselves.

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, who launched the blueprint yesterday, said the strategies laid out in the blueprint will be critical for the financial sector to navigate the oncoming challenges and opportunities, and in turn, complement the 12th Malaysia Plan.

“Now that our national goals are set and the blueprint is drawn, it is time to act.

“This year will not only be a pivotal recovery year for Malaysia, but also a rare opportunity to reform and future-proof ourselves.

“The road ahead will require nothing less than a whole-of-nation approach involving the government, regulators, the private sector, civil society organisations, and yes, the financial community.

“In this regard, I urge the financial sector to collaborate with the government in building back better,” he said.

Tengku Zafrul was speaking during the opening of the MyFintech Week 2022, Bank Negara’s flagship financial technology (fintech) event that will be held virtually from Jan 24-28.

MyFintech Week 2022 will feature more than 100 speakers and experts on critical issues in finance such as digitalisation and innovation, financial inclusion and sustainability.

The finance minister noted that technological advancements in the Malaysian financial industry, spurred by Covid-19, have enabled consumers to enjoy digital solutions throughout the financial value chain.

“For example, in 2020, we have seen merchant registrations for QR acceptance increase 164% and online banking transaction volumes increase 49%, relative to pre-pandemic levels,” he said.

Tengku Zafrul also pointed out that between 2011 and 2020, Malaysia’s e-payment transactions per capita has increased from 49 to 170.

Meanwhile, Bank Negara governor Tan Sri Nor Shamsiah Mohd Yunus said the central bank is committed to fostering greater market dynamism to respond to the changing needs of the economy and society.

“This calls for more and diverse actors in the financial system, operating within well-defined parameters that encourage healthy competition and innovation, alongside prudent and responsible conduct,” she said.

Nor Shamsiah also added that financial services must help people and businesses grow their wealth, engage in trade and commerce, and build resilience.

The financial services companies are expected to help customers manage financial risks and adverse events – including climate and environment related risks to secure lasting prosperity.

“To this end, the blueprint seeks to align the financial sector with the national aspiration to not only become a high value-added and high-income economy, but also lay a solid foundation for a more dynamic, inclusive and sustainable development path,” she said.

In a separate panel session on the first day of MyFintech Week 2022, speakers discussed the need for a greater collaboration between the public and private sectors for an enhanced domestic financial sector.

Standard Chartered Malaysia Bhd chairman Datuk Yvonne Chia said banks must establish extensive relationships with other external providers, including the new banks, disruptors and startups.

“This is where we can talk about a form of open banking and opening up data sharing platforms.

“It is quite clear to see that there is a need for transactional data, such as incoming and outgoing payments, which would give insights on credit capacity behaviour across retail and microbusinesses,” she said.

Another panelist, ShopeePay Malaysia head Alain Yee pointed out that the public and private sectors could collaborate in creating new critical capabilities such as national identity registers, an open data ecosystem and a more advanced shared payment infrastructure.

“This will be crucial for the advancement of data-driven decision making, for example, in credit scoring and increasing resilience of the financial system as well,” he said.

Bank Negara deputy governor Datuk Abdul Rasheed Ghaffour noted that the new five-year plan for the financial sector aims to “push the boundaries of finance” amid the uncertain operating environment.

“Partnership between private and public players features quite prominently in the blueprint, perhaps even more so in the context of digitalisation.

“We emphasised strategies that seek to strengthen cybersecurity arrangements, promote the development of infrastructure that is inter-operable and advance common standards as well as data governance and privacy principles,” according to him.

A former foreign bank CEO said as digital banking gained traction, it was imperative that security and privacy of clients remained priority.

“The banking game is changing but we must not forget the core of the industry is the customers,” he said.

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