17:36 PM

Fintech Forum at KUIS

I had the opportunity to be one of the panel speakers for the 2017 Quarterly Islamic Finance Public Lecture IRCIEF-IRTI. The topic of the forum is "Forum: Fintech Technology: The Stand Of Banks".

In the forum, Ustaz Wan Rumaizi bin Wan Husin (Bank Rakyat/PRU-BSN-TAKAFUL) was the moderator. Some of the questions from the moderator were:

Assoc. Professor Dr. Rusni Hassan (IIUM) and Encik Zul from DinarPal was there too to answer some questions.

I can't specifically remember what was the questions and answers of the panel speakers, but here are what i said to some of the questions. Or to the ones that I remember.

ROUND 1: GENERAL Malaysian startup companies focus on tech areas in mobile, e-commerce, cloud and big data segments. Nowadays, 4 out of 5 top listed tech companies in South-Asia are based in Malaysia, and this confirms a booming startup eco-system in the country. How could banks and financial institutions benefit from this development? As an IT expert who has a keen interest in blockchain tech, could you share with us its potential functionality within a financial environment? and do you think that it is a worthy IT upgrade for banks?

_The development of startups in Malaysia and the asian region is a positive one. Particularly in the area of fintech. Some argue or fear that fintech will somehow make banks unnecessary. However, as for now, there are many services that the bank do not cater, from microfinancing, p2p lending, p2p fund raising and etc that the banks do not handle due to its low profit margin. All of these services will somehow compliment the banking sector and allow the banks to concentrate on what matters. Thus in the long run, make management of financial institution more focused and streamlined towards larger and dependable services.

ROUND 2: COSTING The best way for banks to face and deal with IT costing once it decided to embrace fintech or say blockchain tech. Is there a cheaper alternative without compromising the quality and ability to serve its client?

_In short, surely blockchain is going to benefit the financial sector in the long run. The cost for migration maybe difficult, but the benefits of reducing Opex is there. Particularly, with the use of blockchain banks and financial sectors can rely in the distributed nature of blockchain to make sure their data is secure and intact despite local or global catastrophe. The innovation in blockchain will allow banks to provide services in the most remote areas without having outlets. This will provide better reach to a lot of individuals that are unbanked. Operational cost for banks would reduce and banks can concentrate on services. This cost savings due to technology is already seen in most industry as they move to cloud systems. Some banks have moved to this type or architecture as well. The next level of innovation would be in blockchain.

ROUND 3: As a strict regulated economy model adopted by Malaysian Financial/Monetary authority, experts believe thats in this country until regulatory authorities create the conducive atmosphere to nurture innovation in Fintech, the quality, efficiency and accessibility of digital financial services will not improve. The challenge however lies in the fact that Fintech is a continuous innovating technology therefore the government and its regulatory agencies should be ready to tackle this continuous and ever changing nature of fintech and what it brings along in term of financial risk and financial stability. The question is, does the current initiative made by Financial Agencies and authorities will be able to cope with the destructive power of Fintech? Should Malaysian authorities adopt a more robust and aggressive approach like Singapore who believe that "Regulation shouldn't stand in the way of Fintech"? What could be shared from the perspective of an IT expert in formulating such framework? What should the framework covers?

_It is called distruptive technology because its almost impossible to stop it in anyway. If it is not for the cost savings, the efficiency and reliability, it won't evolve to overtake traditional businesses. Having said that, like Singapore, Malaysia too have to be open to such innovation. Malaysia have started exploring on a regulatory sandbox last April 2017 and the government have invested alot in encouraging such innovation. The main problem today is to somehow work with fintech startups to assure that some legal aspects of KYC and AML can be implemented. The fintech system must allow innovation that can bring progress to the country and its people. The technology must in the end benefit the stakeholders, particularly the people of Malaysia who are paying taxes. Assuring good governance is a good start.

At the forum in action. Forum Talkes

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