Malaysia Opens a Fintech Sandbox


May 29, 2017

Malaysia is ramping up its forces in the global race for the newest fintech innovation. The Asian country has launched its first fintech sandbox with the help of the central bank. The regulatory sandbox will be open to both foreign and local startups.


Enhancing its fintech sector


Bank Negara Malaysia (BNM) had earlier started focusing its efforts in supporting and developing fintech companies. It launched a special unit called the Financial Technology Enabler Group (FTEG) last year. The group’s focus would be on managing how these technological innovations make their way into the country’s financial services sector.


During the launch of FTEG, the central bank also opened up for applications on how to best improve the quality, efficiency and accessibility of the Malaysian financial services sector for these new startups. The sandbox will now open up under the scrutiny of the central bank and the aim is to ensure Malaysia can create a fintech environment that doesn’t damage the existing system too much and which can provide the most benefits for the consumer and the economy as a whole.


The sandbox and its regulatory framework


The sandbox is tightly controlled by BNM, which has set the limits for the participating fintech firms. These participating startups will be able to launch their services commercially but they do need to follow the regulatory guidelines the bank and the government regulator has set them.


The bank had been accepting applications since last year, with the participants now being revealed to the public. As part of the sandbox experience, GoBear and GetCover are able to provide financial assistance. Insurance aggregators WorldRemit and MoneyWatch can help conduct remittance services, with MoneyWatch also having the ability to provide money-changing services.


Out of the startups, GoBear and WorldRemit are foreign-owned. GoBear’s Dutch investor will be looking to enhance its presence in the region in countries like Singapore, Thailand and Malaysia. WorldRemit’s refugee-turned-entrepreneur founder, Ismail Ahmed, has already attracted over $145m in investments. During its latest fundraising round, the London-based company was valued at $500m.


Country-wide focus on fintech


The central bank is not the only bank that’s closely following the fintech sector. A number of the local banks are looking to deepen their understanding of the sector, with the hope of being part of the fintech revolution of the financial sector. CIMB recently began ramping up its technology expertise. The bank set up a new fintech unit, CIMB Fintech, which it is aiming to help develop new banking solutions for its customer. Olivier Crespin, the former Group Head Digital Bank at DBS in Singapore, is to start as the unit’s chief fintech officer in June.


Asia has been following behind the US and Europe in terms of fintech. But the governments of Asian countries have actively started looking into the sector, with local companies also getting involved with strengthening innovation. The fight for the top spot in fintech might start heating up again – it’ll be interesting to see which country comes on top or if the revolution is truly global.

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