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Malaysia’s Regulatory Environment for FinTech: A Balanced Approach

Malaysia has established itself as a hub for FinTech innovation, with a proactive approach to regulating the industry. The country’s regulators have struck a balance between supporting innovation and ensuring financial stability and security.

Regulatory Support for FinTech

• Dedicated Department: The Bank Negara Malaysia (BNM) has a dedicated department focused on FinTech issues.
• Financial Technology Enabler Group (FTEG): FTEG operates the regulatory sandbox, providing a safe and controlled environment for FinTech companies to test their products and services.

Industry Collaboration

• Partnerships with FinTech Companies: 35% of financial institutions prefer joint partnerships with FinTech companies.
• Global Banks’ Intention to Partner with FinTech Firms: 82% of global banks, insurers, and investment managers intend to increase their partnerships with FinTech firms over the next three to five years.

Open Banking Framework

• Consultation Paper in 2020: BNM is working on an Open Banking framework, aiming to release a consultation paper in 2020.

Cyber Security

• Top Issue for Malaysian Banks: Cyber security is among the top issues for major Malaysian banks.
• Financial Threat Intelligence Platform: Regulators are taking steps to mitigate cyber threats, including creating a Financial Threat Intelligence Platform by 2020Q2.

Crypto Assets

• Regulatory Clarity: The Securities Commission (SC) has clarified that digital assets are not legal tender in Malaysia.
• Requirements for Electronic Platforms: The SC has set requirements for electronic platforms that aid with trading these assets.

Conclusion

Malaysia appears to be taking a balanced approach to regulating FinTech, supporting innovation while ensuring the safety and soundness of the financial system. This proactive regulatory environment is likely to continue to attract FinTech companies and investors to the country.