This country-specific Q&A provides an overview to Fintech law in Malaysia.
It will cover open banking, regulation of data, cryptocurrencies, blockchain, AI and insurtech.
This Q&A is part of the global guide to Fintech. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/fintech/
What are the sources of payments law in your jurisdiction?
In Malaysia, payments are regulated by our Central Bank also known as Bank Negara Malaysia which translates into ‘The National Bank of Malaysia’. To enable the Bank to meet the objectives of a central bank, it is vested with comprehensive legal powers under the following legislation to regulate and supervise the financial system. These pieces of legislation act as the source of what we identify as law governing payments and finances in the country. Listed below are the acts that govern the said law:
A. Central Bank of Malaysia Act 2009 (Act 701)
An Act to provide for the continued existence of the Central Bank of Malaysia and for the administration, objects, functions and powers of the Bank, for consequential or incidental matters.
B. Central Bank of Malaysia Act 1958 (Revised-1994) [Repealed, except for Part III]
An Act to provide for the establishment, administration, powers and duties of a Central Bank of Malaysia.
*Note: This Act has been repealed by the Central Bank of Malaysia Act 2009 [Act 701] except for Part III on Currency (containing section 18 to section 27A) which continues to be in force notwithstanding the repeal of the Act.
C. Financial Services Act 2013 (Act 758)
An Act to provide for the regulation and supervision of financial institutions, payment systems and other relevant entities and the oversight of the money market and foreign exchange market to promote financial stability and for related, consequential or incidental matters.
D. Islamic Financial Services Act 2013
An Act to provide for the regulation and supervision of Islamic financial institutions, payment systems and other relevant entities and the oversight of the Islamic money market and Islamic foreign exchange market to promote financial stability and compliance with Shariah and for related, consequential or incidental matters.
E. Insurance Act 1996
An Act to provide new laws for the licensing and regulation of insurance business, insurance broking business, adjusting business and financial advisory business and for other related purposes. Incorporating Latest Amendments up to Act A1247/2005 - cif : 1 Jan. 1997
*Note: This act has been repealed except section 147(4), 147(5), 150, 151, 144 and 224 shall continue to remain in full force and effect, see section 275 of FSA 2013 - Act 758
F. Development Financial Institutions Act 2002 (Act 618)
The DFIA which came into force on 15 February 2002 focuses on promoting the development of effective and efficient development financial institutions (DFIs) to ensure that the roles, objectives and activities of the DFIs are consistent with the Government policies and that the mandated roles are effectively and efficiently implemented. DFIA also emphasises on efficient management and effective corporate governance, provides a comprehensive supervision mechanism and mechanism to strengthen the financial position of DFIs through the specification of prudential requirements.
G. Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (Act 613)
The AMLATFPUAA provides for the offence of money laundering, the measures to be taken for the prevention of money laundering and terrorism financing offences, investigation powers and the forfeiture of property involved in or derived from money laundering and terrorism financing offences, as well as terrorist property, proceeds of an unlawful activity and instrumentalities of an offence. The First Schedule of the AMLATFPUAA contains a list of the reporting institutions under the AMLATFPUAA i.e. financial institutions and designated non-financial businesses and professions which are required to perform certain obligations which are designed to prevent money laundering and terrorism financing offences. The Second Schedule of the AMLATFPUAA lists serious offences from various legislations, which if committed, are likely to result in a person benefitting or deriving proceeds from the offence.
The AMLATFPUAA promotes a collaborative and multi-agency approach by setting out the powers and functions of:
a. the competent authority which is responsible to oversee the performance of obligations by the reporting institutions, facilitate the enforcement of the AMLATFPUAA and co-operate with the foreign financial intelligence units;
b. enforcement agencies which are responsible to investigate the offences under the AMLATFPUAA; and
c. supervisory and regulatory authorities which are responsible to facilitate in the implementation of the AMLATFPUAA.
The Minister of Finance has appointed BNM as the competent authority under the AMLATFPUAA. The Financial Intelligence and Enforcement Department of BNM is responsible to perform BNM's functions as the competent authority under the AMLATFPUAA
H. Money Services Business Act 2011
The Money Services Business Act 2011 (MSBA) provides for the licensing, regulation and supervision of the money services business comprising money changing, remittance and wholesale currency businesses. The MSBA was enacted with the aim of supporting the development of a more dynamic, competitive and professional money services business industry, (comprising the money changing, remittance and wholesale currency businesses), while strengthening safeguards against money laundering, terrorist financing and illegal activities.
I. Anti-Money Laundering and Counter Financing of Terrorism Policy for Digital Currencies
The policy aims to ensure that effective measures are in place against money laundering and terrorism financing risks associated with the use of digital currencies and to increase the transparency of digital currency activities in Malaysia.
Can payment services be provided by non-banks, and if so on what conditions?
In Malaysia, non-banks are allowed to provide payment services, however, the only condition that must be satisfied is that these services must be permitted and regulated by the Central Bank (BNM). Currently, there are very limited payment services offered by non-banks and approved by BNM, but the number of them providing said services are increasing.
Below is the list of Regulated Non-Banks providing specific payment services at present time:
A. Credit Card Issuers
i. AEON Credit Service (M) Berhad
ii. Paydee Sdn. Bhd.
B. Charge Card Issuers
*Limited Purpose Charge Card Issued to Company to Purchase Petrol and Petroleum Products*
i. Boustead Petroleum Marketing Sdn. Berhad
ii. Chevron Malaysia Limited
iii. Petron Fuel International Sdn. Berhad
iv. PETRONAS Dagangan Berhad
v. Radius Fuel Cards Sdn. Bhd.
vi. Shell Malaysia Trading Sdn. Berhad
C. E-money Issuers
i. AEON Credit Services (M) Berhad
ii. Alipay Malaysia Sdn Bhd (formerly known as helloPay Malaysia Sdn Bhd)
iii. Axiata Digital eCode Sdn. Bhd.
iv. Bandar Utama City Centre Sdn. Bhd.
v. BigPay Malaysia Sdn. Bhd.
vi. Celcom eCommerce Sdn. Bhd. (formerly known as Celcom Multimedia (Malaysia) Sdn. Bhd.)
vii. Chevron Malaysia Limited
viii. DIV Services Sdn Bhd (formerly known as ePetrol Services Sdn Bhd)
ix. Fass Payment Solutions Sdn. Bhd.
x. Finexus Cards Sdn. Bhd. (formerly known as MAA Cards Sdn. Bhd.)
xi. Fullrich Malaysia Sdn Bhd
xii. Google Payment Malaysia Sdn. Bhd.
xiii. GPay Network (M) Sdn Bhd
xiv. iPay88 (M) Sdn. Bhd.
xv. I-Serve Payment Gateway Sdn Bhd
xvi. JuruQuest Consulting Sdn. Bhd.
xvii. ManagePay Services Sdn. Bhd.
xviii. Maxis Broadband Sdn. Bhd.
xix. Merchantrade Asia Sdn Bhd
xx. Mobile Money International Sdn. Bhd.
xxi. MobilityOne Sdn Bhd
xxii. MOL AccessPortal Sdn. Bhd.
xxiii. MRuncit Commerce Sdn. Bhd.
xxiv. MyEG Alternative Payment Services Sdn Bhd
xxv. Numoni DFS Sdn. Bhd. (formerly known as Com2U Sdn. Bhd.)
xxvi. PayPal Pte. Ltd.
xxvii. Petron Fuel International Sdn. Bhd.
xxviii. Presto Pay Sdn. Bhd. (formerly known as EPP Solution Sdn. Bhd.)
xxix. Raffcomm Sdn. Bhd.
xxx. Shell Malaysia Trading Sdn. Bhd.
xxxi. SiliconNet Technologies Sdn. Bhd.
xxxii. Silverlake Global Payments Sdn. Bhd.
xxxiii. SMJ Teratai Sdn Bhd
xxxiv. Touch 'n Go Sdn. Bhd.
xxxv. TNG Digital Sdn. Bhd.
xxxvi. Valyou Sdn. Bhd.
xxxvii. Webonline Dot Com Sdn. Bhd.
xxxviii. WeChat Pay Malaysia Sdn. Bhd.
xxxix. XOX Com Sdn. Bhd.
D. Registered Business (Merchant Acquiring Services)
i. 2C2P System (Malaysia) Sdn. Bhd.
ii. AEON Credit Service (M) Berhad
iii. AsiaPay (M) Sdn. Bhd.
iv. Discover Enterprise Sdn. Bhd.
v. Finexus Cards Sdn. Bhd.
vi. First Data Merchant Solutions (Malaysia) Sdn. Bhd.
vii. GHL Cardpay Sdn. Bhd.
viii. GHL ePayments Sdn. Bhd.
ix. Gkash Sdn. Bhd.
x. Global Payments Card Processing Malaysia Sdn. Bhd. (Global Payments)
xi. I-Serve Payment Gateway Sdn. Bhd.
xii. Interbase Resources Sdn. Bhd.
xiii. ManagePay Services Sdn. Bhd.
xiv. iPay88 (M) Sdn. Bhd.
xv. MC Payment (M) Sdn. Bhd.
xvi. Mobiedge E-Commerce Sdn. Bhd.
xvii. MobilityOne Sdn. Bhd.
xviii. Mobiversa Sdn. Bhd.
xix. MOLPay Sdn. Bhd.
xx. Paydee Sdn. Bhd.
xxi. Paydibs Sdn. Bhd.
xxii. Presto Pay Sdn. Bhd. (formerly known as EPP Solution Sdn. Bhd.)
xxiii. Revenue Harvest Sdn. Bhd.
xxiv. Revenue Monster Sdn. Bhd.
xxv. Revenue Solution Sdn. Bhd.
xxvi. Simplepay Gateway Sdn. Bhd.
xxvii. Sinopay (Malaysia) Sdn. Bhd.
xxviii. U Mobile Sdn. Bhd.
xxix. Wirecard Payment Solutions Malaysia Sdn. Bhd.
What are the most popular payment methods and payment instruments in your jurisdiction?
Payment methods that are most popular in Malaysia at present time based on surveys conducted are as follows, with examples:
A. Credit card channel
B. Internet banking services
c. HongLeong connect
C. E-wallet services
b. Wechat Pay
D. Payment over the counter
a. Cash payment
What is the status of open banking in your jurisdiction (i.e. access to banks’ transaction data and push-payment functionality by third party service providers)? Is it mandated by law, if so to which entities, and what is state of implementation in practice?
The Personal Data Protection Act 2010 (“PDPA”) was gazetted in June 2010 and came into force in 2013. It regulates the collection, use, processing and disclosure of personal data and provide protection for an individual's personal information to be processed for the purposes of commercial transactions. Section 4 of the PDPA defines ‘commercial transactions’ as “any transaction of a commercial nature, whether contractual or not, which includes any matters relating to the supply or exchange of goods or services, agency, investments, financing, banking and insurance, but does not include a credit reporting business carried out by a credit reporting agency under the Credit Reporting Agencies Act 2010”. The PDPA applies to all data users. Any information or data or a chain of information that allows a living individual to be identified are covered under the PDPA. Some examples of data that can be considered as personal data are name, address, identification card number and passport number. All individuals and organizations that process personal data in their dealings must comply with the rules set out in the PDPA. This would include any financial institutions. However, the Federal Government and the State are exempted.
Further, the Malaysian Communications and Multimedia Commission was created pursuant to the Malaysian Communications and Multimedia Commission Act 1998 as a new regulator for the communications and multimedia industry in Malaysia. At the same time, the Communications and Multimedia Act 1998 (“CMA”) was passed, to fulfil the need to regulate an increasingly convergent communications and multimedia industry. The CMA is based on the basic principles of transparency and clarity, more competition and less regulation, flexibility, regulatory forbearance, administrative and sector transparency and industry self-regulation. The CMA seeks to provide a generic set of regulatory provisions based on generic definitions of market and service activities and services. The jurisdiction of the CMA is restricted to networked services and activities only.
The CMA is complementary to the PDPA and should be used in the best interest of the people in terms of integrity and security of personal data of an individual. The promulgation of the personal data protection legislation was also mentioned in the CMA to ensure information security, and network strength and reliability.
How does the regulation of data in your jurisdiction impact on the provision of financial services to consumers and businesses?
As mentioned above, all individuals and organizations that process personal data in their dealings must comply with the rules set out in the PDPA except for the Federal Government and the State Government. Any information or data or a chain of information that allows a living individual to be identified are to be dealt in accordance with the provisions specified in the PDPA. The PDPA gives right to the individual for the use of his or her information and data as follows:
a) The right to be told whether their data is processed by an organization;
b) The right to access personal data;
c) The right to rectify personal data;
d) The right to withdraw consent to process personal data;
e) The right to prevent processing likely to cause damage or distress;
f) The right to prevent processing for purposes of direct marketing.
The PDPA provides that if any individuals feel that their personal data have been processed in breach of any provision of the PDPA, that individual may make a complaint to the Personal Data Protection Commissioner. The PDPA is able to strengthen personal data protection as a social obligation and to mitigate the risk of misuse and misappropriation of personal data. This is important in order to protect the privacy of an individual, apart from the objective of producing dignified, integral and responsible traders in daily practices hinged on widespread use of e-commerce characteristics.
What are regulators in your jurisdiction doing to encourage innovation in the financial sector? Are there any initiatives such as sandboxes, or special regulatory conditions for fintechs?
In the Malaysian market the regulatory bodies are providing strong support and accelerating fintech growth. Bank Negara Malaysia (“BNM”) seeks to provide a regulatory environment that is conducive for the deployment of fintech. This includes reviewing and adapting regulatory requirements or procedures that may unintentionally inhibit innovation or render them non-viable. As part of this process, the Financial Technology Regulatory Sandbox Framework (“BNM Framework”) is introduced in 2016 to enable innovation of fintech to be deployed and tested in a live environment, within specified parameters and timeframes. The BNM Framework also is to enable the experimentation of fintech solution in a live environment, subject to appropriate safeguards and regulatory requirements. BNM has demonstrated its desire to grow and encourage the industry by approving several firms to operate within BNM Framework.
The Securities Commission of Malaysia (“SC”), which regulates the Malaysian capital markets, has adopted a digital markets strategy intended to enhance access to financing, increase investor participation, augment the institutional market and develop synergistic ecosystems for the capital markets in Malaysia. Stockbroking, provision of investment advice, financial planning, dealing in derivatives and advising on corporate finance are among the activities regulated by the SC under the Capital Market Services Act 2007 (“CMSA”).
In 2015, the SC launched the ‘Alliance of FinTech Community’ (“aFINity@SC”). This is an initiative facilitated by the SC to catalyse greater interest towards the development of emerging technology-driven innovations in financial services, whether existing or prospectively developing in Malaysia. aFINity@SC is about forming a network of community engagements among relevant FinTech stakeholders towards spurring more FinTech-focused innovation. The SC will work together with relevant fintech-related stakeholders including innovators, entrepreneurs, established businesses, investors and other authorities, as part of a concerted effort to accelerate growth and innovation in the financial market.
In addition, as part of SC’s effort to nurture and facilitate market-based innovation in fintech under the aFINity@SC initiative, the regulatory framework for equity crowdfunding (“ECF”) was introduced in February 2015. The SC has approved a number of crowdfunding platforms through which individuals can invest their money. For examples, FundedByMe (Alix Global), Ata Plus, Crowdonomic, Eureeca, pitchIN and Crowdplus. Continuing on the initiatives, SC has introduced the regulatory framework for peer to peer (“P2P”), setting out requirements for the registration and obligations of a P2P operator as provided in the revised Guidelines on Recognized Markets in May 2016 (Revised further in January 2019). The P2P framework will enable eligible businesses and companies to access market-based financing to fund their projects or businesses via an electronic platform.
Additionally, the Financial Technology Enabler Group (“FTEG”) was established by BNM in June 2016 to support innovations that will improve the quality, efficiency and accessibility of financial services in Malaysia. Comprising of cross functional group within BNM, the FTEG is responsible for formulating and enhancing regulatory policies to facilitate the adoption of technological innovations in the Malaysian financial services industry. The FTEG has also launched a fintech regulatory sandbox, a live regulatory environment where fintech products can be deployed and tested within specified parameters and timeframes. The idea behind the sandbox is to ensure that FTEG can catch regulatory and compliance policies that may inhibit innovation in the financial service sector, by looking at how fintech start-ups operate and what using their products entail.
With this active government support, Malaysia’s fintech ecosystem is on the fast track for growth and development.
Do you foresee any imminent risks to the growth of the fintech market in your jurisdiction?
We do believe that there are no imminent risks to the local fintech market at present. However, based on the recent study done, it was revealed that fintech find talent shortages an acute issue, with over half saying that there was a lack of startup or fintech talent in the markets they operate in. Based on the survey, all the Malaysian fintech firms say that they have trouble hiring talent to meet the needs and growth of the industry. The sophisticated new technology requires people with the expertise to use it properly, something frequently seen as lacking in the Malaysian financial services sector. The top three areas of talent shortage for Malaysian fintech are in technology, software, sales and compliance.
A recent study by Frost & Sullivan indicated that the potential economic loss in Malaysia due to cyber-security incidents can reach up to 4% of Malaysia’s Gross Domestic Product (“GDP”). This situation is made worse by the fact that due to shortage of cyber-security professionals in Malaysia, banks may soon find that it will become increasingly difficult and expensive to fully manage cybersecurity in-house. Hence, through the facilitation of Malaysia Digital Economy Corporation Sdn Bhd (“MDEC”) PRIDE programme, MDEC will increase the industry-readiness of our graduates with ‘ELITE’, the Educational Outreach initiative from cyber security industry provider, TecForte which will feature a live learning Security Information Event Management (“SIEM”) platform. The students will be introduced to hands-on cybersecurity operations and exposed to real-time event analytics, global threat intelligence, and incidents handling framework within the campus environment.
What tax incentives exist in your jurisdiction to encourage fintech investment?
There are no tax incentives exist in Malaysia specifically for fintech investment. However, SMEs in Malaysia are given preferential tax rates as well as a wide range of tax incentives for businesses in the manufacturing, services and agriculture sectors. Fiscal incentives are pioneer status, investment tax allowance, reinvestment allowance, accelerated capital allowance and industrial building allowance, for example, pioneer status with income tax exemption of various percentages by the Malaysian Industrial Development Authority (“MIDA”).
Apart from the that, Multimedia Super Corridor (“MSC”) Malaysia status recognition by MDEC for information and communication technology (“ICT”) and ICT-facilitated businesses that meet specified criteria available to local and foreign companies. Specific incentives are granted to MSC Malaysia status entities, including the MSC Malaysia Bill of Guarantees, 100% exemption from taxable statutory income, 100% investment tax allowance, eligibility for research and development grants, and freedom to source capital and borrow funds under specific waivers from the foreign exchange administration requirements of Malaysia.
Which areas of fintech are attracting investment in your jurisdiction, and at what level (Series A, Series B etc)?
Fintech investment in Malaysia is a mixed of Series A and Series B investments. For instance, Jirnexu a Malaysian founded fintech company has received a US$10 million in its second Series B investment (RM41.7 million), bringing its total funding up to US$27 million. Jirnexu is known for operating RinggitPlus, one of the well-known comparison platforms for products like credit cards, loans and insurance. Jirnexu gains its investment from Experian, a consumer credit information company which aims to help users manage their financial data, and also utilises the investing in start-ups strategy to stay ahead. In 2013 Jirnexu had launched RinggitPlus for the Malaysian market. Jirnexu’s first financial comparison website gave end users a handy tool to research the best banking or insurance product for their needs, without the hassle of visiting five different websites to do it.
Besides that, Sumimoto Mitsui has invested into a Malaysian fintech company, Soft Space for both Series A and Series B. Soft Space is a digital payments company that focuses on the development of innovative solutions for the electronic banking and payment industry. Apart from that, MyCash Online is another example of a Malaysian fintech company. MyCash Online is an e-Marketplace specially designed for massive pools of Migrants in Malaysia & Singapore. MyCash Online is offering easy, secure and convenient online services to the foreign workers, who do not have access to online banking or credit cards.
If a fintech entrepreneur was looking for a jurisdiction in which to begin operations, why would it choose yours?
There are many incubator and accelerator programs, and even government channels that fintech firms can leverage for seed funding. There are funding available for new and growing businesses in Malaysia. For instance, governmental action and support for Small and Medium Enterprise (“SMEs”) have been available through policies coordinated by SME Corporation Malaysia and implemented by specified agencies of the Government and banking sector. Financial institutions like bank and development financial institutions like Small Medium Enterprise Development Bank Malaysia Berhad provide debt financing. Furthermore, there is one programme under the SME Masterplan which provides early stage financing through the establishment of investment companies to invest in potential SMEs, not limited to fintech businesses. These could assist new fintech entrepreneurs to begin its operations in Malaysia.
Apart from the above, MSC Malaysia status is one of the reasons to attract new fintech entrepreneur to Malaysia. As previously mentioned in section 8 above, MSC Malaysia status is a recognition by the Government of Malaysia through MDEC for ICT and ICT-facilitated businesses that develop or use multimedia technologies to produce and enhance their products and services. It is also a mark of world-class service and achievement and your passport and gateway to a host of privileges granted by the Government of Malaysia to the business entities.
The following are some of the incentives granted by the Federal Government of Malaysia to MSC Malaysia status companies: -
a) Pioneer Status privilege with a five (5) + five (5) year 100% exemption from taxable statutory income (on income derived from qualifying activities) starting from the date when the company starts generating income, renewable to 10 years
b) 100% Investment Tax Allowance (ITA) on new investments made in MSC Malaysia Cybercities/Cybercentres, commencing from the date on which the first qualifying capital expenditure is incurred.
c) Eligible for R&D grants (for majority Malaysian owned MSC Malaysia status companies)
d) Freedom to source capital globally for MSC Malaysia infrastructure and the right to borrow funds globally.
e) Freedom of ownership by exempting companies with MSC Malaysia status from local ownership requirements.
f) Unrestricted employment of foreign knowledge workers.
g) Duty-free importation of multimedia equipment, provided that the equipment is used by the company in the operation of its business, and not for direct sale and trading or use as components in manufactured items.
h) Globally competitive telecommunication tariffs and services guarantees if MSC Malaysia status companies are located within the MSC Malaysia.
i) Intellectual property protection and a pioneering and comprehensive framework of cyberlaws can be enjoyed by MSC Malaysia status companies irrespective of location.
Additionally, as mentioned previously, the SC has approved a number of crowdfunding platforms through which individuals can invest their money. The SC has issued guidelines for parties to operate platforms based on two concepts of crowdfunding – one involving the sale of equity in small companies, and the other for small companies to issue debt. The first is ECF and the other is P2P financing platforms, where individuals invest money in small companies in the form of debt, through licensed online platforms. The underlying premise behind P2P financing and ECF is that both allow the public to invest in SMEs or start-ups with the necessary safeguards in place.
Access to talent is often cited as a key issue for fintechs – are there any immigration rules in your jurisdiction which would help or hinder that access, whether in force now or imminently? For instance, are quotas systems/immigration caps in place in your jurisdiction and how are they determined?
With Malaysia’s continuous economic growth, specifically through the launch of the Economic Transformation Programme (ETP) in September 2010, Malaysia has been recognised as a world-class destination for foreign talent and is ranked by the World Bank in its “Doing Business 2015” report as the top 20 globally “ease of doing business” destinations, coming ahead of Switzerland, UAE, Japan and France, to name only a few. The ETP focuses on the implementation of 12 National Key Economic Areas which are significant areas in promoting and strengthening the economic stability of Malaysia.
In line with the above, the mammoth growth of multinational corporations (MNCs) and the establishment of foreign businesses in Malaysia has resulted in a massive increase in job opportunities across various industries. The professional opportunities available in Malaysia are certainly an attraction for foreign talent to move to Malaysia. Malaysia also recognises the value and contribution of foreign talent and several programmes have been implemented towards achieving the goal as setting Malaysia as the top destination for foreign talent. These programmes are listed below:
i. Establishment of Talent Corporation Malaysia Berhad (Talent Corp)
Talent Corp was established on 1 January 2011 under the Prime Minister’s Department to attract and retain foreign talent. Talent Corp collaborates with the Immigration Department of Malaysia to streamline and enhance immigration service delivery for expatriates. One of the facilities introduced in 2011 was the Residence Pass-Talent (RP-T), which is a 10-year renewable pass for highly qualified expatriates to continue to reside and work in Malaysia. The RP-T offers expatriates an attractive range of benefits such as the flexibility to change employers without having to obtain a new work pass and facilities for dependants to work and study in Malaysia.
ii. Introduction of Malaysia Expatriate Talent Service Centre (MYXpats Centre)
A new processing division to bring faster processing of work pass and related applications was introduced on 1 June 2015, called the MYXpats Centre. With the introduction of the MYXpats Centre, which is a joint initiative between Talent Corp and the Immigration Department of Malaysia, the related immigration processes to facilitate foreign talent in Malaysia have improved significantly. Employers sponsoring work pass applications can benefit from consistent five-day processing time of Employment Pass applications and other related applications. The overall immigration service has also been enhanced with the establishment of the Help Desk at MYXpats Centre, which can be easily accessed for any immigration related queries. The Help Desk has also been prompt in issuing notices of closure/disruption of service during festive season which helps in managing expectations of employers and their business needs.
iii. A new classification of Employment Pass (Employment Pass Category III)
As of 15 July 2015, the Ministry of Home Affairs introduced a new category of work pass, the Employment Pass (Category III). Foreign nationals whose Malaysia work contracts do not exceed twelve months and whose monthly basis salaries range from MYR 2500.00 to MYR 4999.99 are eligible to apply under this category of work pass. This is significantly less than the current minimum salary requirement for a standard Employment Pass application, which is MYR 5000.00. Employers seeking to hire foreign nationals under this category will, however need to obtain an exemption from the minimum salary requirement of MYR 5000.00 from the Ministry of Home Affairs in Malaysia. The implementation of Employment Pass (Category III) is a platform for employers to hire short-term foreign nationals under a lower salary than the standard Employment Pass.
iv. International Students Mobility Programme under a Social Visit Pass
Importance is also placed in attracting international students to Malaysia. The International Student Mobility Programme was implemented to attract companies registered with the Expatriate Services Division that intend to undertake short-term placements of international students within their company. The programme allows international students pursuing a degree or equivalent certification from a recognized university or institution outside of Malaysia to participate in activities such as student exchanges, industrial or practical training, internships, mentorships and other similar programmes at the sponsoring company’s offices in Malaysia.
Other factors such as cultural diversity, stability, geographical advantages, healthcare, education, and infrastructure have also made Malaysia a top talent destination. Based on these various factors, Kuala Lumpur has also been voted among the top 100 most liveable countries in the world in the Economist Intelligence Unit's 2014 Global Liveability Ranking.
v. Returning Expert Programme
The Government of Malaysia also appreciates the significant contribution its citizens can offer towards the growth of the country’s economic, political and social development from their own experiences abroad. It recognises that these contributions can be more effective and beneficial if the knowledge, experience, contacts and intercultural abilities citizens have gained abroad can be applied in Malaysia. Therefore, the Returning Expert Programme which was originally introduced in 2001 and is now under the purview of Talent Corp, aims at encouraging and facilitating Malaysians abroad with expertise in selected priority sectors to return and work in Malaysia. The objective of this programme is to allow them to contribute their skills and experience towards the development of the country. This programme offers attractive living and financial incentives and is also intended to help overcome the shortage of professional and technical experts in the country by creating a world-class workforce in Malaysia.
The above-mentioned initiatives are expected to attract foreign talent to Malaysia to support the economic growth in Malaysia by streamlining immigration rules and procedures which will then result in substantial contributions to Malaysia’s economic performance and growth in human capital.
If there are gaps in access to talent, are regulators looking to fill these and if so how? How much impact does the fintech industry have on influencing immigration policy in your jurisdiction?
Looking at the broad picture, access to talent seems to be a strong point when looking at Malaysia and the opportunity it presents international individuals and also aspiring locals. However, when we discuss the gaps in dealing with access to talent, Malaysia takes a broad step forward in continuing to innovate ideas on how to fill those gaps (If existent).
When we speak about the fintech industries contribution to Malaysia and its access to talent, it is rest assured that the country is aware of the upcoming popularity and its constant uprising in today’s world.
In collboration with SuperCharger, an Asian financial technology (fintech) accelerator, Asia Pacific University of Technology & Innovation (APU) becomes the first university in Malaysia to offer undergraduate programmes related to fintech, to address the needs for talent development in this emerging industry. The launch of the programme was officiated through the signing of the Memorandum of Agreement (MOA) between APIIT Education Group chief executive officer Parmjit Singh and SuperCharger Fintech Accelerator Asia general manager Johnny Mayo.
The Bachelor in Banking and Finance with a special emphasis in Financial Technology is a three-year degree programme that aims to deliver technical knowledge and skills in handling digital banking and finance products and services. Specialised modules delivered through the programme include introduction on essentials of Fintech, Enabling Fintech, Digital Currencies and Blockchain Technologies, Crowdfunding and Alternative Lending, Fintech Governance, Risk Management & Compliance with the ability for the students to become entrepreneurs in fintech.
Under the collaboration between SuperCharger and APU, the APU SuperCharger Fintech Academy will also be established at APU, to facilitate the research and development in Fintech-related areas. SuperCharger will offer their assistance to students in realising their fintech startup ideas, encouraging them to be fintech entrepreneurs in the future. It is also anticipated that SuperCharger will continue to facilitate guest lectures at APU to expose students and staff towards this emerging industry. The Bachelor in Banking and Finance with a special emphasis in Financial Technology is expected to commence in February 2019.
What protections can a fintech use in your jurisdiction to protect its intellectual property?
FinTech companies will likely hold several types of IP that they can and should seek to protect. Trade marks, for example, provide vital security and protection for a company’s name and branding. In terms of protecting innovation itself, if it’s software-based one option is copyright for the relevant code. However, copyright is limited in that it only protects the specific expression of code that underpins a concept and creates an effect; it does nothing to prevent a competitor achieving the same effect using code that has been developed independently. Ultimately, if your innovation is based on a new technology or process, a patent is the best option for providing strong protection of innovation. With a lifetime of 20 years, it allows a company to safeguard their entire invention for the long-term while they gain a foothold in the market.
Innovations and inventions are protectable under the patent, copyright and industrial design laws as well as confidential information under the common law in Malaysia. In relation to IP related protections that fintech’s are able to use in Malaysia, listed below are the available IP operations that are in effect in the jurisdiction:
Under the Copyright Act 1987, the copyright shall vest initially in the author of the copyrighted work except (subject to any contrary agreement):
a. where the work is commissioned by a person who is not the author’s employer, copyright is deemed to be transferred to the person who commissions the work; and
b. where the work is made in the course of the author’s employment, the copyright is deemed to be transferred to the author’s employers,
*Where the work is made by or under the direction or control of the Government, Government organisation or international body, the copyright shall initially vest in them*
II. Trade Marks
Under the Trade Marks Act 1976, any person claiming to be the proprietor of a trade mark used or proposed to be used by him may apply to the Registrar for the registration of that mark. While the proprietor of a registered trade mark is the person whose name appears on the Register as the owner, the concept of proprietorship for the purposes of an application for registration depends on who is entitled to the exclusive use of the trade mark, i.e. the first person to use the mark in the course of trade and to develop business goodwill in relation to that mark.
Under the Patents Act 1983, the right to a patent belongs to the inventor unless the invention is made by an employee (including Government employees, employees of Government Organisation or enterprise) or pursuant to a commission in which case the right to the invention will be deemed to accrue to the employer or the person who commissioned the work, subject to any contrary agreement.
IV. Industrial Designs
Under the Industrial Designs Act 1996, the author of the industrial design is entitled to make an application for registration except for (subject to any contrary agreement):
a. industrial designs created pursuant to a commission or money or money’s worth, the person who commissioned the work is the original owner; and
b. industrial designs created by an employee in the course of employment, the employer is the original owner,
Except for copyright where registration is voluntary, one must have a patent, trade mark or industrial design registration in Malaysia to enjoy protection of these rights in Malaysia.
How are cryptocurrencies treated under the regulatory framework in your jurisdiction?
The Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order which came into operation on the 15 of January 2019 defines cryptocurrency, or known in the order as ‘Digital Currency’, as “a digital representation of value which is recorded on a distributed ledger whether cryptographically-secured or otherwise, that functions as a medium of exchange and is interchangeable with any money, including through the crediting or debiting of an account.”
Under the Order, a Digital Currency is prescribed as securities for the purpose of securities law in the event that the currency is one which:
a) Is traded in a place or on a facility where offers to sell, purchase or change of, the digital currency are regularly made or accepted
b) A person expects a return in any form from the trading, conversion or redemption of the digital currency or the appreciation in the value of the digital currency, and
c) Is not issued or guaranteed by any government body or central banks as may be specified by the Commision
One of the key features of Cryptocurrencies are that they are not issued by the Central Bank of any country. This feature is exactly what makes a cryptocurrency such as Bitcoin not recognized as money in Malaysia (or “not legal tender” as the law puts it).
In Malaysia, what’s recognized as currency is controlled by the Central Bank of Malaysia Act 2009 (CBM 2009), and Part III of the Central Bank of Malaysia Act 1958 (CBM 1958). Under Section 20 of the CBM 1958, only Bank Negara Malaysia (The central bank) has the right to issue currency in Malaysia - any currencies issued by other people are illegal.
Section 20 of the Central Bank of Malaysia Act 1958
“The Bank shall have the sole right of issuing notes and coin throughout Malaysia and neither the Government nor the Government of any State nor any public authority, or banking institution or other financial institution, or other institution or persons shall issue currency notes, bank notes or coin or any documents or tokens payable to bearer on demand being documental tokens which, in the opinion of the Bank, are likely to pass as legal tender.”
“Legal tender” means money that’s accepted for payment in Malaysia under Section 24 of the CBM 1958. And since Section 18 defines the currency of Malaysia as the Ringgit, therefore all digital currencies are not recognized as legal money in Malaysia.
Cryptocurrencies like Bitcoin could still be recognized as a “foreign currency” under our CMB 2009. Section 2(1) defines a “foreign currency” as:
“...currency notes or coins which are legal tender in any country, territory or place outside Malaysia…”
It could be argued that since Japan recognizes Bitcoin as money, it could be considered a “foreign currency”. But this still doesn’t legalize Bitcoin, because all foreign currencies, whether the US Dollar, UK Pound, or Indian Rupee, are not “legal tender” in Malaysia. While we see currency exchange at banks and licensed money changers as part of everyday life, you won’t see someone trying to pay the grocer store in US Dollars - it’s not accepted as money in Malaysia. Even if the grocer stores accepts US Dollars, it’s a private arrangement between you and the store. In the end, the shop will still have to convert it into Ringgit to get their money’s worth.
How are initial coin offerings treated in your jurisdiction? Do you foresee any change in this over the next 12-24 months?
Under The Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019, Initial Coin Offerings (ICO’s), otherwise known as ‘Digital Tokens’ are defined as a digital representation which is recorded on a distributed ledger whether cryptographically-secured or otherwise.
The Order further defines that a Digital Token which represents a right of interest of a person in an arrangement made for the purpose of, or having the effect of, providing facilities for the person is prescribed as securities for the purpose of the securities law, where:
a) The person receives the digital token in exchange for a consideration
b) The consideration or contribution from the person, and the income or returns are pooled
c) The income or returns of the arrangement are generated from the acquisition, holding, management or disposal of any property assets or business activities
d) The person expects a return in any form from the trading, conversion or redemption of the digital token or the appreciation in the value of the digital token
e) The person does not have day-to-day control over the management of the property, assets or business of the arrangement, and
f) The digital token is not issue or guaranteed by any government body or central banks as may be specified by the commission
In addition to this, The Malaysian Securities Commission then issued an updated Guideline on Recognised Markets on the 31st of January 2019 covering Market Operators, Equity Crowdfunding Platform, Peer-to-Peer funding platform, Digital Exchange and Digital Asset. Digital Asset refers collectively to a Digital Currency or Digital Token.
Pursuant to Paragraph 15.17 on the latest guidelines on recognized markets, if a person wishes to issue a Digital Token, it must comply with the relevant guidelines issued by the SC. Such Digital Token would still require approval from the SC prior to being traded on any digital asset exchange.
Are you aware of any live blockchain projects (beyond proof of concept) in your jurisdiction and if so in what areas?
Based on the types of projects found, there is an interesting correlation between Islam and Malaysia’s unique blockchain projects. Malaysia has always been one of the spearheaders of Islamic anything, from setting the standard to the international halal industry to pushing Islamic finance.
In particular, there has been vast interest from locals in utilising blockchain to streamline the process of helping the needy, like with alms and even refugee citizenship, though the last does not quite fall under the purvey of ‘Islamic’.
Malaysia does not have a reputation for blockchain within the global sphere, but what we may lack in advancement, we seem to be making up for in uniqueness—in particular, Islamic blockchain. Blockchain projects are upcoming in Malaysia, and some of these projects are already established with goals set to be achieved. A few of these projects will be listed below:
I. Syariah-Compliant Blockhain
A Malaysian government committee has just partnered up with South Korean blockchain lab IncuBlock to work on developing blockchain permissible under Syariah Law.
A memorandum of understanding has been signed between both parties to develop a platform for decentralised applications that would both meet what the team characterises as social requirements, while still being permissible under the Syariah Commission.
Similarly to the development of Islamic finance in Malaysia, upon the project’s public launch it will be interesting to observe if this blockchain will manage to gain traction outside of the usual Islamic finance circles, and what exactly a Syariah-compliant blockchain would entail.
II. NEM Blockchain Centre
NEM is primarily known as an altcoin (cryptocurrency that is alternative to the digital currency Bitcoin), like Ethereum or Dogecoin, but more than that it is also currently a huge advocate of blockchain development in Malaysia.
This is notable in the Malaysian context because NEM’s headquarters and biggest office in the ASEAN region is housed in Malaysia. The NEM Blockchain centre in part, invites software developers, business users, startups, exchanges and the Blockchain community to test and develop use cases for the NEM Blockchain.
Often, those interested in working on blockchain will park their technology onto the Ethereum network, or develop their own. NEM’s presence in Southeast Asia allows programmers to develop their project within NEM’s network instead which is less cluttered by international projects, at least for now.
III. The Malaysian Securities Commission’s project enabling them to Keep Tabs on Over-the-counter Markets Via Blockchain
A Securities Commission pilot project looks at utilising the Malaysian company Neuroware’s Cortex technology, a blockchain agnostic service that is able to work across different hosts of distributed ledger technologies without being tied to a specific ledger, will be utilised for the over-the-counter (OTC) markets.
OTC usually refers to companies that do not meet the listing requirements set by the Securities Commission, or also known as unlisted stocks and traditionally traded by brokers.
The regulator’s goal is for all transactions and market activities to be recorded and made available to all market participants, while transaction confidentiality is maintained.
Upon completion of this pilot project, the findings will be published as an industry blueprint.
To what extent are you aware of artificial intelligence already being used in the financial sector in your jurisdiction, and do you think regulation will impede or encourage its further use?
More banks are planning to replace their front-office employees with chatbots and conversational user interfaces to serve clients and enhance customer experience, according to multinational law firm Baker McKenzie’s latest report. Similarly, in Malaysia, banks have taken steps in implementing Artificial Intelligence in an attempt to assist their everyday functions.
These banking services are being transformed from human interaction to virtual assistants. Making use of AI, natural language and predictive analytics, banks in Malaysia have implemented chat assistants (Chatbots), which are Artificial Intelligence-driven virtual assistants which help their clients in day to day queries. These chatbots are able to search for past transactions, provide information about financial services and help arrange meetings with financial advisors.
An example would be HSBC Bank launching a Chatbot named Amy for its corporate banking clients. Amy understands both English and simplified Chinese, and can provide prompt response to banking queries 24X7.
Malaysian banks have their own success in chatbots. CIMB Bank launched Enhanced Virtual Assistant (EVA), and since its inception in Dec 2016, EVA has generated around 130,000 downloads and 300,000 transactions. RHB Bank and RinggitPlus, meanwhile, jointly launched My RHB Easy, a Chatbot which gives users the flexibility of applying for a personal loan 24X7, without the manual completion and submission of application forms. Chatbots are not the only AI enabled functionality being used by banks. Financial services providers are also heaping on other revolutionised technological innovation to streamline their business model. Biometrics such as voice, facial, iris and fingerprint are becoming an integral part of authenticating individual customers which allows faster approval and overcoming the challenges of manual signature based verification.
In terms of placing regulations on the use of Artificial Intelligence in the financial sector, one must look at the wider picture. While all of the above looks like a fairy tale for the industry, there is also a dark side to it.
Increasing use of AI will also lead to the extinction of human bankers. Gone will be the days when customers will be greeted by a bright smile when they walk into a bank. Automation is leading to disruption in banking jobs. Malaysian banking jobs will not be immune to automation. The Malaysian Employers Federation has predicted that 50,000 Malaysians are expected to lose their jobs in 2018, the bulk of whom will be from manufacturing, insurance and banking. Disruption in the banking sector is also due to pressure created by the rise of financial technology (FinTech) startups, which can provide innovative financial solutions faster at much-reduced cost.
Most financial services providers are jumping on the AI bandwagon without a clear thought strategy of AI implementation, leading to their dependence on robotics and thus losing their human intelligence. This suggests that there is a mismatch between providers and users of the financial services when it comes to the use of AI enabled technology. Clearly, AI has emerged as both boon and bane for the financial services industry. At one end of the spectrum it is expected to streamline operations by providing efficiency and reliability, while on the flip side, it will disrupt the role of humans in financial advisory.
It all goes back to the role of the policymakers and regulators to find a balance between the Rise of the Machine and the Death of the Humanity. Hence why it is in my view that regulation of the use of Artificial Intelligence in the financial sector is indeed important in helping find that much required balance.
Insurtech is generally thought to be developing but some way behind other areas of fintech such as payments. Is there much insurtech business in your jurisdiction and if so what form does it generally take?
Insurtech in Malaysia has long been considered something underdog with most attention going to the banking sector. Formerly, insurers appeared to be unconvinced and uncertain about insurtech. They are in doubt on the customer readiness to accept fintech specifically insurtech. Insurtech in Malaysia is still nascent, there is much value it can add to the Malaysian society. The insurers begin to realise that somehow insurtech matters for Malaysians. The regulations aimed to cutting down on agency use, insurance companies have over past couple of years branched out into online platforms and mobile applications, making insurtech more accessible to the customers.
RHB Insurance Berhad (“RHB Insurance”) launches ‘RHB Insurance Mobile App’, which enables its customers to purchase motor insurance policy and road tax with just a single end-to-end mobile enabled application. This would allow users to complete the purchase of their motor insurance policy in three minutes, among the fastest in the financial industry. The customers are able to obtain a quotation for their motor insurance policy, opt to renew road tax, comprehensive insurance coverage for their vehicles and as well as access round-the-clock auto assistance and support at the touch of their smartphone screens.
Besides that, Allianz Malaysia Berhad (“Allianz”) is partnering with PolicyStreet to provide Malaysians with better online access to insurance products. PolicyStreet is an insurance technology company which offers an online curated platform with an aim to provide simple and affordable insurance solutions that cater for all customer needs. Through the new partnership, PolicyStreet is offering four of Allianz digital products.
Apart from the above, AXA Affin announced their insurtech play AXA eMedic, which focuses on offering low barrier to entry e-medical cards targeted at young professionals and families. AXA Affin has partnered with various companies ranging from insurtech start-ups, telecommunication companies and digital health companies. AXA Affin claims that the entire process of signing up for the product takes less than five minutes and requires no medical check-up.
Are there any areas of fintech that are particularly strong in your jurisdiction?
Based on the statistics from BNM, it is clear that online banking is still the dominant channel for Malaysians to perform transaction. Both mobile banking and e-money shows a considerably larger volume in transaction. The data tells a narrative that mobile payments whether through digital wallets or mobile banking is the preferred channel to perform micropayments rather than the traditional way. Both payments and wallets, much like last year’s report, remains the largest representation of the fintech Malaysia scene. Payments represents 19% of the market whereas wallet represents 17% of the market, compared to previous year’s 18% and 12% respectively.
It is likely that the digital wallet growth is caused by a combination of players being aware of the growing demand for mobile payments and others jumping into the bandwagon. AliPay, Boost, Touch ‘N Go, VCash, iPay88 and MOLPay are among the instances of fintech companies’ applications currently available in Malaysia. Nonetheless the space is becoming increasingly crowded, it’s difficult for a month to pass in Malaysia without an announcement of a new wallet player in town.
What is the status of collaboration vs disruption in your jurisdiction as between fintechs and incumbent financial institutions?
The banking industry is undergoing significant change as customers demand digital services. To meet these evolving needs, banks are realizing the value of partnering with fintech firms to spark innovation. Previously, based on the study conducted by PricewaterhouseCoopers Malaysia in 2016, about 82% of the financial institutions worry about losing to fintechs. The financial institutions are very concerned about the regulatory uncertainty and information technology security. Fast forward to now in the year 2019, Malaysia’s fintech industry has expanded further, particularly in banking, innovation and high-technology areas. Financial institutions seem ready to embrace the disruption caused by fintech, as seen with the various programmes launched by these enterprises to help fintech startups develop.
Based on an article published, it was said that Domenic Fuda, CEO and Group Managing Director, Hong Leong Bank Berhad feels that the fintech landscape has really been flourishing this past three years with both homegrown and regional players entering the market. He believes that the fintech ecosystem has much room to grow in Malaysia especially in areas like lending and KYC, while payments are wallet, he opines are more crowded than others. He believes that fintech companies need to work together with incumbents, such as banks in order to be successful. A collaborative approach as opposed to a disruptive one would be well suited for a highly regulated sector like finance. He added that, partnering with fintechs offer opportunities for the incumbent in many areas such as delivering cost reduction opportunities, differentiated offerings, and customer retention, to prospects for additional revenues.
Furthermore, Jambugesvarar Marimuthu, Head of Digital Strategy and Innovation for RHB Bank Berhad (“RHB) as saying in an article published, feels that fintech in Malaysia has gone past its infancy and is approaching the point of maturity with the private and government sector becoming increasingly welcoming towards fintech. He believes that Malaysia has yet to achieve status of a fintech hub and for that reason he is being cautious not to be over positive about fintech. He believes that the industry would require more regulatory change, consumer education and most importantly stronger collaboration between banks and fintech companies to allow more innovation to happen in the industry.
Recognizing the need for a cooperative relationship between banks and fintech companies, RHB has embarked on several initiatives. In 2015 was when RHB really started their journey, where their main focus was primarily to understand the needs of fintech and identify possible synergies to work together. RHB is already working with two of the leading fintech companies in Malaysia namely MoneyMatch and Funding Societies. It was made to understand that RHB will also continuously work closely with the fintech community to discover more opportunities to collaborate while also contributing to growth of fintech in the market alongside with regulators like BNM and SC in the near future.
Moreover, as seen in an article Malayan Banking Berhad (“Maybank”) Maybank sees Maybank Fintech as a tremendous opportunity for themselves to harness the startups ecosystem regionally, to acquire the best innovation ideas in financial technology. Maybank has launched the Maybank Sandbox, the finance giant provides entrepreneurs and startups with the facility to get their fintech ideas out to be developed. The emergence of technology in the financial sector has opened up new opportunities that allow banks like Maybank to reach a bigger market, offer an enhanced customer experience, and improve the efficiency of systems and operations.
To what extent are the banks and other incumbent financial institutions in your jurisdiction carrying out their own fintech development / innovation programmes?
As mentioned above, it can be seen that the financial institutions in Malaysia considered fintech as an innovation rather than a threat. There are several instances to show that Malaysian financial institutions are carrying out their own fintech development and innovation programmes. For instance, RHB has launched an application known as RHBMyHome mortgage app which enables users to apply for mortgage loans, submit their documents and check the status online. Alongside with that RHB has also launched the RHB Rider Service. It is an account activation service that allows RHB customers who have opened an online account, to request for a bank’s staff to visit their office or home for KYC and account activation.
Another example that can be illustrated in which Maybank has launched their Maybank Fintech Sandbox. It is a platform which aims to provide opportunities for start-ups and innovators to develop and test new ideas by leveraging on the banking group’s internal digital and technology expertise. The sandbox will also provide fintech companies with the environment, tools, simulated data, APIs to experiment around. Maybank was recently known for being the first bank to launch a digital wallet called MaybankPay and their recent soft launch for Maybank QRPay.
Are there any strong examples of disruption through fintech in your jurisdiction?
There is no one specific example of major disruption through fintech in Malaysia. However, the disruption is visible mostly in payments and digital wallet, followed by lending, wealth management, marketplace, crowdfunding, and know your customer (“KYC”). The digital wallet from established player such as AliPAy, Wechat Pay and others will continue to disrupt the payment market and impact bank’s revenue. It must be highlighted that fintech start-ups that engage in activities under the purview of the central bank must comply with existing laws. The regulated businesses which include banking, insurance or takaful, money changing, remittance, operating a payment system or issuing payment instruments.
The regulations that govern fintech industry in Malaysia are regulated by BNM and other relevant authorities help to alleviate and mitigate the disruption that arise through fintech. The fintech players are also moving fast in their alliances and partnerships with financial services institutions in order to ensure the innovation of their products and better solutions. With a large migrant worker population in Malaysia, the payment services sector has been disrupted recently with entry of non-bank local and foreign owed businesses.
Furthermore, those that continue to rely on physical documents and wet signatures will likely be the first to fall. KYC is a tedious task for customers. For the KYC to be done, customers have to be physically present to meet face to face with bank representatives for many types of banking products. BNM has recently published the e-KYC guidelines for remittance companies and is currently mooting an industry wide adoption. Should the e-KYC be approved a wave of change would be seen on how customers apply and sign up for products digitally in the future. Nevertheless, this would be a great innovation for the financial sector in Malaysia.