Selection of digital banks must be transparent, free from intervention

by S BIRRUNTHA / pic by MUHD AMIN NAHARUL

THE winners for the country’s first digital banking licences must be chosen wisely and transparently without the interference of any political motives, according to experts.

Bank Negara Malaysia (BNM) was supposed to announce the five successful applicants of digital banking licences in Malaysia at the end of last month.

Read more: BNM to notify 5 successful digital bank licence applicants soon

However, the central bank’s governor Tan Sri Nor Shamsiah Mohd Yunus recently said the announcement would be made upon completion of the legal process.

Putra Business School Assoc Prof Dr Ahmed Razman Abdul Latiff said the delay in the announcement by BNM could be due to the overall meticulous process of choosing and filtering the most deserving applicants.

He added that this could be the reason why there is a delay of announcement by the central bank as they would want to be thorough in their assessments.

“In my opinion, as digital banking licence is still new in Malaysia, it is very important that the governance process must be adhered to accordingly as well as the legal process.

“However, it is important that such a legal process is not impeded by any political intervention as it is very important to ensure those who will be granted licence are chosen,” he told The Malaysian Reserve (TMR) in a phone interview.

Ahmed Razman pointed out that this is because of their merit and ability to contribute to the society development especially in uplifting the economic wellbeing of the unserved and underserved population. The central bank is expected to announce the names of successful applications soon although no specific dates have been given as of yet.

During the six-month application period, which ended on June 30, 2021, BNM received 29 applications for the digital banking licence.

Banks, industry conglomerates, technology enterprises, e-commerce operators, fintech players, cooperatives and state governments were among those who applied.

Five digital banks will be granted licences to provide financial services to underserved and unserved populations.

Numerous applicants already provide financial services via mobile wallets and payment systems.

Successful applicants will be required to contribute to increased financial inclusion by offering goods and services that solve market gaps in underserved and unserved segments.

By utilising the innovative application of technology, the programme strives to promote relevant and affordable financial solutions.

The delay has caused jitters in the market, as it has been close to two weeks since the deadline. Meanwhile, Centre for Market Education Fellow and UCSI University Malaysia Assistant Professor of Finance Dr Liew Chee Yoong opined that there are many possibilities for the delay of announcement by the central bank on the winners of digital banking licences.

“Politics could be one of them, but I believe politics exists in every institution.

“It could also be due to the fact that BNM is still analysing various feasibility issues with regards to the implementation of digital banking in Malaysia,” he told TMR.

Liew added that the possible legal issues that BNM is looking into currently is how the Financial Services Act 2013 or the Islamic Financial Services Act 2013 would be able to accommodate digital banking in Malaysia.

“Digital banks have to comply with these laws,” he noted.