The Malaysian Banking, Financial Services and Insurance (BFSI) industry is undergoing a transformative shift driven by the adoption of cutting-edge technologies like Artificial Intelligence (AI), blockchain, and Open Banking. This surge in innovative payment solutions is directly addressing the evolving demands of Malaysian consumers who are increasingly seeking convenient and contactless payment methods.

Market Highlights

A recent UOB ASEAN Consumer Sentiment study revealed that a staggering 68% of Malaysian consumers are eager to embrace new and convenient contactless payment methods. Recognizing this trend, Datuk Ahmad Hizzad bin Baharuddin, Chairman of Payments Network Malaysia (PayNet), emphasizes the importance of “embracing emerging technologies to create a future-proof payments ecosystem that caters to evolving customer demands.”

Opportunities for the BFSI Industry

• Harnessing the Power of Open Banking: By leveraging Open Banking APIs, BFSI institutions can foster collaboration with Fintech companies to develop a wider array of innovative payment solutions. This includes features like account aggregation, which allows users to view all their financial accounts in one place, and instant money transfers for greater convenience. The global Open Banking market is projected to reach a significant USD 43.15 billion by 2027 (Grand View Research). Maybank exemplifies this approach by launching an Open Banking platform that empowers customers to connect third-party financial apps for streamlined financial management.
• Exploring Blockchain Technology: Blockchain technology holds immense potential for the BFSI industry, particularly in facilitating secure and instant international transactions. World Bank studies suggest that blockchain-powered cross-border payments can reduce transaction costs by up to 70%. CIMB is at the forefront of this innovation, partnering with a blockchain consortium to pilot a cross-border payments solution that enables faster and more cost-effective international money transfers.

Opportunities for Telcos

Telecommunication companies (Telcos) play a vital role in supporting the growth of a robust and secure payments ecosystem in Malaysia. Here’s how they can contribute:

• Building a Strong Foundation: Providing robust and secure mobile network infrastructure with high-speed and reliable data connectivity is essential. This ensures the seamless functioning of mobile wallets and digital payment applications.
• Co-creating Innovative Solutions: Collaborating with BFSI companies to develop user-friendly mobile wallets with features like contactless payments and in-app purchases will further enhance the customer experience.
• Streamlining Onboarding: Partnering on secure digital identity verification solutions will not only enhance security but also streamline customer onboarding processes for BFSI institutions.

Learning from Others: Singapore’s FAST Initiative

Singapore’s launch of the “Fast and Secure Transfers (FAST)” initiative serves as a prime example of successful implementation of a real-time payments network. FAST allows for instant interbank transfers across various participating financial institutions, offering several key benefits:

• 24/7 Availability: Users can enjoy the convenience of real-time transactions anytime, 24/7.
• Enhanced Security: The secure infrastructure leverages blockchain technology for added peace of mind.
• Mobile Integration: FAST offers convenient integration with mobile banking apps for easy access and money management.

The success of FAST in Singapore has demonstrably improved the efficiency and convenience of electronic payments, paving the way for a more frictionless financial landscape.

Conclusion

By embracing emerging technologies and fostering strong partnerships with Telcos, the Malaysian BFSI industry is well-positioned to create a frictionless and secure payments ecosystem. This will not only promote financial inclusion but also propel the nation’s digital economy forward.