PETALING JAYA: Financial technology (fintech) firms are looking forward to the introduction of the fintech regulatory framework that is slated to be revealed this month as it will create clarity and certainty.
“We support and embrace regulation as it protects the consumers, provides regulatory clarity for fintech startups and lowers barriers to entry and at the same time helps to accelerate the time-to-market for innovative financial solutions,” Next Money KL, the local chapter of the world’s fastest growing fintech collaboration platform, told SunBiz recently via email.
It said the establishment of Financial Technology Enabler Group (FTEG) by Bank Negara Malaysia to formulate and enhance regulatory policies to facilitate the adoption of fintech in the country is a good start.
Next Money KL is all for active regulation provided that the regulator continues to keep abreast of developments in the fintech industry and be forward-thinking in enabling innovation in Malaysia.
“We strongly believe in the engagement between regulator and the fintech players and the open community would help to design better policies and regulation. Next Money KL as a leading fintech community continues to speak up for the industry and aspires to play a role as the bridger to link fintech players and regulators,” it said.
According to Malaysia-based financial comparison startup, Jirnexu, regulation will also make it easier for financial services institutions to engage with fintech companies which can meet the regulatory requirements.
“At Jirnexu we treat compliance as a competitive advantage and have built our technology platform and operating processes on the assumption that we would be subject to the same level of regulatory scrutiny as existing banks and insurance companies,” its CEO Yuen Tuck Siew said.
He believes that companies offering any kind of financial service to the general public must accept that rules and regulations need to be in place to protect the consumer. “We are not young kids playing in a startup sandbox,” he added.
CEO and co-founder of iMoney Lee Ching Wei believes that in order for Malaysia to have a thriving fintech industry, there has to be a symbiotic relationship between the regulatory authorities and the fintech industry players.
He said consumers, while wanting innovative solutions, also want to feel secure when it comes to their finances.
Lee said fintech industry players are looking to the future to enable progress in the financial industry but not at the expense of regulations.
“Although we encourage regulation in this space, we strongly feel that innovation should still be led by private entities like ourselves and not by the regulators. The danger lies in over-regulation when the regulators determine what is acceptable as innovation and what is not.
“This is why it’s important for regulators to be in constant engagement with industry players when creating the framework. In this sense, Bank Negara has already taken a very positive step in setting up its FTEG,” he said.
However, Lee said iMoney, as one of the pioneers of fintech in Malaysia, is definitely keen for regulators to take a more active role with the regulation of the fintech space where there are so many variables and swift changes.
“Frequent engagement with fintech players in developing the regulatory framework is essential as well as taking an active role in addressing gaps or adjustments to regulations as we go along.”
Currently, without specific regulations around fintech innovations, startups have more freedom in how they design, implement and iterate many of their services to achieve the best user experience as well as process efficiency.
“At present, we also do not need to submit any requests for approval for anything that we do, which is a great boon for us as it speeds up execution times greatly,” Lee added.
Next Money KL concurred, saying one of the advantages of non-regulation is that the fintech firms can operate from best practices in other countries and localise the ideas in Malaysia rapidly. “They are able to focus on the development of the product without allocating resources for regulatory compliance,” it added.
However, having a solid regulatory framework in place will help with customer confidence.
Lee noted that customers today are weary of dealing with fintech companies, especially in the online space. It is a valid concern, he said, since it deals with their sensitive financial data.
One of the cons in a non-regulated environment, as Next Money KL noted, is the uncertainty of fintech firms facing potential clampdown due to regulatory constraints and it affects public confidence, especially among customers of the firms.
It said there is also the possibility of startups being hauled to court due to grey areas of non-regulation.
Thus, having regulations in place will allow smoother operations between fintech companies and major financial service providers as it will address many of their concerns around working with their own regulations
– the Sun