BNM to foster an enabling data ecosystem

The central bank will be launching the Financial Sector Blueprint early next year, its deputy governor says 


BANK Negara Malaysia (BNM) is committed to fostering an enabling environment for data-sharing in the banking and financial institutions moving forward. 

Its Deputy Governor Datuk Shaik Abdul Rasheed Abdul Ghaffour said the central bank will focus on developing common standards for high-impact use cases and strengthening the digital data governance framework to ensure the protection and fair treatment of financial consumers. 

He added that BNM is actively collaborating with other stakeholders to enhance accessibility to public data under the government’s open data initiatives and to contribute to the development of a robust data protection legal framework. 

The Ministry of Health’s recent launch of “COVIDNOW”, a one-stop portal for Covid-19 data, is a good example of moving towards data-driven policy decisions, he said. 

The initiative, which has received encouraging feedback so far, demonstrates public-private partnerships are possible and, in fact, much needed. 

“Similarly, the banking sector should make the most of the progress in the data ecosystem to further advance financial inclusion, to empower consumers to make informed financial decisions, and to develop innovative financial solutions that benefit the people as a whole,” he said at the virtual 2021 Malaysian Banking and Finance Summit organised by the KSI Strategic Institute for Asia Pacific recently. 

Shaik Abdul Rasheed said BNM will be launching the Financial Sector Blueprint early next year, which will set the vision for the financial sector for 2022 to 2026. 

He said the increasing digitalisation and emerging new business models are reshaping the identity of the financial sector, as shown by changing consumer behaviour, the blurring of boundaries within and beyond the financial sector, and the way of consumers interacting with finance. 

The rapidly evolving landscape brings a host of opportunities, including lower costs for financial services, more tailored and convenient financial offerings, and a greater ability to reach underserved and unserved segments. 

“Reflecting on these opportunities, the reality is that the lines between technology and finance are increasingly vague, with marketplace innovations leading the way. 

“New financial players such as big tech firms have been able to enter financial services and scale up rapidly by harnessing their users’ data and leveraging network effects,” he explained. 

Shaik Abdul Rasheed said these technology-driven developments will have profound implications for regulators and more broadly, for the financial sector. 

BNM as well as other central banks around the world are mindful of these complex challenges and the opportunities that lie ahead. 

Meanwhile, Shaik Abdul Rasheed said the banking industry will need to be proactive and ensure it continues to build the capacity required to extend support to borrowers in a timely and efficient manner. 

He said this includes extending new financing to support the economic recovery as more businesses are gradually allowed to resume operations. 

“Since the structural reforms of the post-Asian Financial Crisis era, banks have been a source of stability and strength.

“This must continue, even as banks contend with the long-lasting effects of the Covid-19 pandemic, including the potential double whammy of reduced income and higher loan defaults by individuals and businesses,” he added. 

At the end of the second quarter, outstanding loans to both the business and household segments increased by 1.3% and 5.3%, respectively, compared to the same period last year. 

Shaik Abdul Rasheed said banks must continue to strengthen their countercyclical role to support the economy by continuing to finance viable but distressed borrowers, while BNM will continue to assist the industry by providing support in various areas. 

“The financial industry should seize this opportunity to contribute to the recovery process and broader reform agendas of the nation. 

“The pandemic has underscored and exacerbated some of the deep structural issues in the economy, notably in the labour market, where more vulnerable workers groups have been affected,” he said. 

As the economy moves into the recovery period, he believes policies should shift from job preservation to job creation, and banks can contribute through the provision of financing and also support in other ways.