Datuk Syed Zaid Albar
Chairman, Securities Commission Malaysia
at the "Smart Showcase Series: The Future of Fintech in ASEAN"
15 August 2019
Yang Berbahagia, Tan Sri Dr Munir Majid, Distinguished guests, ladies and gentlemen. |
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| 1. | It is a pleasure for me to be here this morning and I would like to thank you for inviting me to this symposium - the “Smart Showcase Series” with the theme - “Future of Fintech in ASEAN”. |
| 2. | I would like to commend the CIMB ASEAN Research Institute (CARI) for your continued efforts in thought leadership, and I believe from the discussions today, each and every one of us will take back something that will benefit us all. |
| 3. | Today, I would like to share how we view transformative technology from the lens of a securities regulator. The SC sees Fintech as a potential catalyst in bringing ASEAN markets and nations together. |
| 4. | In the ASEAN region, the Fintech industry has successfully raised about 40% of all start-up funding1. It is leading innovation in every corner of the market, giving rise to new business models and solutions in trading, fundraising, and asset management. It is particularly prized for its ability to offer simple yet practical solutions in our everyday lives. |
Ladies and gentlemen, SC’S DIGITAL AGENDA |
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| 5. | CARI’s 2019 theme - “Future of Fintech in ASEAN” resonates strongly with SC’s Digital Agenda for the capital market. The SC recognises the inclusive potential of Fintech in making our capital market more accessible to a wider range of stakeholders, agile to emerging trends and upholding accountability among its participants. |
| 6. | The SC Digital Agenda was developed to fulfil four core objectives – Firstly, enhancing access to financing; secondly, increasing investor participation; thirdly, augmenting the institutional market; and finally, developing synergistic ecosystems. We at the SC will facilitate and support innovation as well as technology-driven solutions for the Malaysian capital market. |
| 7. | In terms of SC’s Digital Agenda, our efforts are to enhance the value chain and providing equal access to financing specifically focused on micro, small and medium enterprises, or MSMEs, because they are traditionally the under-served segment of the financial system, despite being a vital component of the Malaysian economy. |
| 8. | We have made strong progress in this area with ECF and P2P financing platforms. They have collectively raised RM432 million, benefitting over 1,200 MSMEs as at June 2019. |
| 9. | These financing campaigns has in fact attracted more than 12,000 investors – 90% of whom are local and retail investors. Approximately 53% of the participating investors are below the age of 35. This demonstrates the potential of this segment in democratising access to a new generation of investors. |
| 10. | In response to the emerging pool of digital-savvy investors, we at the SC are also facilitating the provision of digital-only services, such as robo-advisory, which offers investing convenience, better accessibility and transparency at a relatively affordable cost. |
| 11. | To date, the SC has licensed three digital investment managers and one digital-only equities broker, as well as approved in principle (AIP) one digital investment manager. We have introduced new requirements for electronic platforms to facilitate trading of digital assets. We have also registered three (3) Recognized Market Operators to establish and operate digital asset exchanges in Malaysia. |
| 12. | ECF, P2P financing, digital investment services and digital assets are some of the innovative business models that have given rise to new investable asset classes. The SC continues to engage regularly with the Fintech community via our Alliance of Fintech Community (aFINity) programme. Moving forward, we expect more participants entering our market, especially in micro-investing, financial planning, investment advice, social investing and automated trading. |
| 13. | While technology heralds greater opportunities in the financial world, these opportunities obviously come with potential risks, and a key risk confronting all stakeholders is the risk of rising cyber threats. SC released our Guidelines on Management of Cyber Risk back in 2016, and we have been hard at work in facilitating its implementation to strengthen the cyber resilience of our capital market. Therefore, even as we enhance the digitisation of our markets, I would like to remind our market intermediaries and investors to remain vigilant and take the issue of cyber risk seriously. |
Ladies and gentlemen, COMMITMENT AND COLLABORATION KEY TO DRIVE REGIONAL FINTECH DEVELOPMENT |
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| 14. | The ASEAN Economic Community’s vision for 2025 is focused on closing the digital gap, increasing financial access and literacy, expanding the scope of intermediary facilities and developing more inclusive financial services for small and medium sized businesses and lower income groups. |
| 15. | Fintech has become integral to the dialogue among ASEAN nations, given technology can serve as a tool to strengthen regional integration and promote inclusive and sustainable regional market development. |
| 16. | However, ASEAN markets differ significantly in terms of consumer preferences, technology infrastructure, regulations and policies. As such, realising the potential benefits Fintech can bring to this region will require commitment and collaboration. It is therefore important that ASEAN regulators develop cooperative agreements between ourselves to nurture the development of Fintech in our respective market place. |
| 17. | These ‘Fintech bridges’ will facilitate information sharing on trends and regulatory developments in Fintech, referrals of Fintech businesses seeking to operate in different jurisdictions and helping entities collaborate in joint innovation projects. We have signed six (6) Fintech cooperation agreements. |
| 18. | Another area which I want to emphasize is collaboration. Collaboration is key for Fintech in the area of talent. The creation of graduate pathways to Fintech and implementation of well-planned educational initiatives, including research academies, can ensure a healthy pipeline of Fintech talent for the capital market. |
| 19. | In the meantime, having an intra-ASEAN support system that accommodates foreign talent through accommodative immigration policies and programmes would also be helpful in alleviating any shortage of Fintech talent. |
Ladies and gentlemen, CONCLUSION |
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| 20. | With an encouraging regulatory regime, and strategic vision from the AEC 2025 blueprint, the momentum for Fintech adoption across ASEAN is gaining, albeit at different speeds. |
| 21. | For us at the SC, our position has always been facilitative, while keeping a watchful eye over potential sources of risk. We have in place regulations which strive to harmonise business needs with investor protection. |
| 22. | Whatever the approach ASEAN regulators might adopt in embracing Fintech innovation, as regulators, we must never lose sight of the intrinsic functions of markets – which is basically to support the real economy. |
| 23. | Ensuring capital markets can be easily accessed across demographics is key to moving societies forward. |
| 24. | With that, I would like to thank CARI once again for inviting me this morning and I wish you a productive conference ahead. |
| Ends/2019 | |
