Fintechs are entering the fray to respond to these needs and gaps in the industry.
Relations between these emerging fintech players and the established banking industry are sometimes portrayed as challenging, even combative. Some traditional banks worry that the fintech wave will disrupt the banking industry in the same way that music downloads disrupted the record industry and Uber is disrupting established transport industries.
But the reality could not be further from the truth. In fact, banks and fintech companies are entering partnerships of collaboration, giving banks access to new technologies, and giving fintech companies access to funding and scale of market opportunity.
Big banks and fintech start-ups have a great deal to offer each other. Banks have a large customer base, stable infrastructure, assets and regulatory know-how. Start-ups provide out-of-the-box thinking, technical expertise, and agility to adapt quickly to change.
Together, they can be far more successful at improving the financial services and customer experience than if they compete against one another. And we'll witness far greater collaboration and integration in the coming years.
In Malaysia specifically, the fintech industry, while still in its nascent stage, is gaining significant momentum. The financial sector blueprint in fact considers fintech as an initiative to achieve the objectives of the country’s ten-year plan as it will extend the provision of financial services beyond the traditional purview of banks. The financial sector blueprint sets out a strategic plan to increase the resilience, efficiency and competitiveness of Malaysia’s financial sector.
In line with this, Bank Negara (BNM) has adopted an agile mindset to the fintech wave through its introduction of the fintech regulatory sandbox framework. This supports innovation that enhances financial services in the country. Startups that offer services varying from insurtech to remittance and money exchange have been admitted to the Sandbox.
Looking ahead, with the presence of renowned players such as Alipay and WeChat Pay in the country, innovation in payments will play a crucial role in the financial landscape.