25 February 2018
visit www.nextgenbanking.co.uk/

Malaysian central bank investigates fintech regulation

13 May 2016  |  12557 views  |  0 strategy

Fintech could bring great benefits to Islamic finance, according to the governor of Bank Negara Malaysia, but also poses risks which regulators need to guard against.

Speaking at a conference, the bank's new governor Muhammad Ibrahim cited the recently launched Investment Account Platform (IAP) as evidence that fintech can be a "game changer" for Islamic finance.

The IAP is an online sharia-compliant investment platform set up by six Malaysian banks and backed by the government that serves as a central marketplace for financing SMEs and is "the first Islamic banking-intermediated internet-based platform that combines the expertise of Islamic banks and efficiency of technology to channel funds from investors to viable economic ventures," says the governor.

The platform is an example, he says, of how fintech can radically transform operational models through digitisation strategies that will be able to deliver much greater scale or, alternatively, a high degree of specialisation.

However, Ibrahim notes that the adoption of fintech is "clearly not without risks" in areas such as cybersecurity and says that the central bank has begun a review "of the changes and additional guidance needed to ensure that the regulatory framework remains appropriate to manage the risks, while encouraging productive innovation that will drive costs down and improve the quality of service to consumers".

The review will look at the impact of fintech on the management of risk by traditional financial institutions, how startups introduce risks to the broader system as a result of regulatory arbitrage, and the impact on consumers.

Says Ibrahim: "We will be providing more information to the market on our approach to the regulation of fintech developments as our review progresses. In the meantime, our engagements with individual firms will continue, supported by dedicated resources within the Bank to lead the review."

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Emirates Islamic introduces Twitter banking

Emirates Islamic introduces Twitter banking

25 April 2016  |  7705 views  |  0 comments | 13 tweets | 23 linkedin
Securities Commission Malaysia hones in on fintech innovation

Securities Commission Malaysia hones in on fintech innovation

04 September 2015  |  7923 views  |  0 comments | 7 tweets | 5 linkedin
Al Hilal Bank credit card with compass points to Mecca

Al Hilal Bank credit card with compass points to Mecca

23 October 2012  |  6577 views  |  2 comments | 6 tweets | 3 linkedin
Noor Islamic Bank opens 'bank of the future' competition

Noor Islamic Bank opens 'bank of the future' competition

02 October 2012  |  4764 views  |  0 comments
Somali Islamists ban mobile money

Somali Islamists ban mobile money

19 October 2010  |  8451 views  |  0 comments

Related blogs

Create a blog about this story (membership required)
visit www.ebaday.comVisit http://info.nice.comRegister for the webinar

Top topics

Most viewed Most shared
Ripple makes new connections to emerging marketsRipple makes new connections to emerging m...
12160 views comments | 16 tweets | 10 linkedin
hands typing furiouslySome Interesting Applications Of The Inter...
10494 views 4 | 9 tweets | 1 linkedin
Basel Committee outlines disruptive fintech scenariosBasel Committee outlines disruptive fintec...
8884 views comments | 15 tweets | 26 linkedin
Investment Association sets up fintech accelerator for asset managersInvestment Association sets up fintech acc...
8331 views comments | 19 tweets | 10 linkedin
R3 creates Legal Centre of Excellence for blockchain technolgyR3 creates Legal Centre of Excellence for...
7947 views comments | 10 tweets | 14 linkedin

Featured job

Competitive
London, UK (or flexible)

Find your next job