Everything You Need to Know About Fintech Policy in Malaysia ft Deputy Governor Adnan Zaylani, BNM

Summary

Bank Negara Malaysia is driving the future of digital finance with a focus on financial inclusion, innovation, and digitalization. The central bank’s efforts include advancing fintech regulations, improving real-time payment systems across ASEAN, and fostering the growth of digital banks aimed at serving underserved populations. The sandbox program has been instrumental in developing new solutions, particularly in digital insurance and Takaful. With upcoming events like My Fintech Week 2025 and the Global Islamic Finance Forum 2025, Malaysia is poised to strengthen its position as a leader in both fintech and Islamic finance, integrating social impact with business success.

Takeaways

• 🏦 Bank Negara Malaysia aims to promote a sustainable, inclusive, and progressive financial system through fintech and digital finance.
• 💡 Advancing digitalization is a key goal, including responsible innovation with AI, asset tokenization, and digital currencies.
• 🧪 The fintech regulatory sandbox, introduced in 2016 and recently revised, supports policy insights, innovation, and bridging industry-regulator understanding.
• 📈 Digital banks are targeting underserved and unserved segments, currently serving 60% of ~1.3 million customers.
• ⏳ The foundational phase for digital banks is 3–5 years, focusing on fulfilling value propositions, enhancing customer experience, and achieving financial viability.
• 🛡️ The Digital Takaful and Insurance (DTO) framework addresses protection gaps, focusing on inclusion, competition, and efficiency, with applications open until 2026.
• 🌱 Value-Based Intermediation (VBI) initiatives integrate social, environmental, and climate impact into finance, with RM650 billion channeled in the banking sector since 2017.
• 🌍 Malaysia is positioning itself as a global leader in Islamic and digital finance, encouraging sustainable growth and financial inclusion.
• 🎉 Upcoming events include My Fintech Week 2025 in August to showcase innovation and facilitate collaboration, and the Global Islamic Finance Forum 2025 in October to bridge tradition and modern business.
• 🤝 Fintech policies and digital transformation are shifting incumbent banks’ mindset, promoting competition, innovation, and enhanced financial services for all segments.

Q & A

What is the primary objective of Bank Negara Malaysia regarding fintech and digital finance?

The primary objective is to promote a sustainable, progressive, and inclusive financial system by leveraging fintech and digital finance to meet evolving customer needs and support the digitalized economy.

What are the key strategies outlined in Malaysia’s 2022–2026 financial sector blueprint?

Key strategies include facilitating responsible innovation, future-proofing digital infrastructure, advancing open finance, enhancing real-time payment connectivity across ASEAN, and adopting emerging technologies such as generative AI and asset tokenization.

What role has the fintech regulatory sandbox played since its introduction in 2016?

The sandbox has allowed fintech companies to test new solutions under regulatory supervision, informed policy development (e.g., EKYC, digital insurance, Takaful frameworks), matured the fintech sector, and helped bring seven out of 13 solutions to commercial viability.

How has the fintech sandbox been revised recently and what is its impact?

The sandbox now includes a fast lane and simplified assessment for applications, resulting in increased participation (11 standard applications and 3 fast-track applications), making it easier for fintechs to launch innovative solutions.

Why is Malaysia focusing on digital banks and who are their target customers?

Malaysia focuses on digital banks to serve the unserved and underserved populations. Currently, 60% of digital bank customers (over 1 million) come from these segments, helping to increase financial inclusion.

What are the next milestones for digital banks in Malaysia?

The next milestones include completing the foundational phase (3–5 years) by fulfilling all value propositions, achieving financial viability, expanding product offerings such as financing, and continuing to serve underserved and unserved customers.

What is Value-Based Intermediation (VBI) and how has it progressed in Malaysia?

VBI integrates social, environmental, and community impact into financial services beyond financial returns. Since 2017, Malaysian banks have channeled around 650 billion ringgit into VBI initiatives, and Takaful operators have reached nearly 1 million customers since adopting VBI in 2023–2024.

What are the goals of the Digital Takaful Operator (DTO) framework?

The DTO framework focuses on inclusion, competition, and efficiency in the Takaful insurance sector. Applications are rolling until 2026, aiming to address protection gaps and bring innovative digital insurance solutions to the market.

How is Malaysia advancing regional financial connectivity?

Malaysia is developing real-time payment linkages with Thailand, Indonesia, Singapore, and Cambodia to enhance intra-ASEAN trade and investment, positioning the country as a regional leader in cross-border digital finance.

What are the upcoming fintech and Islamic finance events in Malaysia?

Upcoming events include MyFintech Week in August 2025, showcasing fintech innovation and industry collaboration, and the Global Islamic Finance Forum in October 2025, focusing on bridging tradition and tomorrow and advancing regional business and community empowerment.

How are digital banks expected to leverage technology for customer experience?

Digital banks are expected to use alternative credit scoring, AI-based assessment models, and fully digital services to enhance customer experience, increase financial literacy, and provide seamless access to financial services.

Why is Malaysia emphasizing financial inclusion and innovation in fintech and Takaful?

Emphasizing inclusion and innovation helps reduce protection gaps, provides financial services to underserved populations, fosters competition, improves efficiency, and positions Malaysia as a leader in both Islamic finance and socially responsible finance globally.