Suhaimi Ali: Opening remarks - Sandbox Open Day
Opening remarks by Mr Suhaimi Ali, Assistant Governor of the Central Bank of
Malaysia (Bank Negara Malaysia), at the Sandbox Open Day, Kuala Lumpur, 24 June
2024.
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Good morning. It is a pleasure to welcome everyone to our inaugural Sandbox Open
Day.
Emerging innovations, such as Generative AI, quantum computing, blockchain, and the
Internet of Things (IoT) are poised to revolutionise the way we operate and deliver
financial services. These technologies promise a new age of possibilities to enhance
efficiency, security, and customer experience.
Up until now, BNM's regulatory Sandbox has had a role in facilitating testing of
innovative use cases and business models such as e-KYC, Buy-Now-PayLater, digital
insurance, and digital remittance.
Our event today is intended to bring together traditional players and disruptors within
the financial ecosystem for meaningful discourses that will chart our journey ahead in
fostering experimentation and driving responsible innovation.
In line with our theme, "Innovation Reimagined", I would like to take the opportunity to
share some insights and suggestions on how we as key agents of the financial
ecosystem can move forward in this area.
First, BNM's role as the regulator is to ensure that avenues such as Sandboxes
continue to support responsible innovation and regulatory adaption. Since its
inception in 2016, the Bank's Regulatory Sandbox has been key in providing a safe
haven for experimentation and contributing to the Bank's calibration of regulatory
policies.
As digital innovation constantly evolves, BNM is therefore committed to ensure that our
regulatory framework continues to remain proportionate to risks and can better unlock
the upsides of innovation. This means creating a conducive environment where
responsible innovation and healthy competition are nurtured, agile players are given an
opportunity to flourish, and associated risks are managed effectively - especially those
that may threaten system-wide stability, consumer outcomes, and confidence in the
financial sector.
With this in mind, we have recently refreshed the Sandbox Framework with two key
enhancements, guided by the principles of parity, proportionality and neutrality:
1. One, the eligibility assessment for admission to the Standard Sandbox has been
simplified for all applicants, making it easier for innovative solutions to be tested.
2. Two, a Green Lane is also introduced to enable financial institutions with proven
risk management capabilities to test their innovations more quickly and flexibly.
Once qualified, financial institutions will be able to register any number of test
2.
projects, with shortened approval windows. I strongly encourage you to plan
ahead on the types of solutions that can benefit from this accelerated track.
Ladies and gentlemen,
Besides regulators, the industry and their strategic partners have a role in
promoting a robust fintech ecosystem. Collaboration has never been more vital as
financial consumers' activities become deeply entrenched in digital ecosystems. For
example, the last three Sandbox test cases involved 17 partnerships between financial
institutions, fintech companies and technology providers. These collaborations have
facilitated the sharing of knowledge and expertise, realising the benefits of innovation
across partners.
Beyond value and unlocking new opportunities, partnerships must also be approached
with a consideration of associated risks and how they can create synergies for
improving risk management practices. I urge everyone to continue exploring how such
partnerships can be better utilised as the winning formula to advance innovation
responsibly.
Today marks such an occasion with the launch of the Sandbox pre-screening
programme by FAOM. This programme provides financial service providers with
advisory support through engagements with experienced mentors within the industry.
Therefore, I encourage interested parties to take advantage of this programme to better
support your journey through the Sandbox.
Third, is for all stakeholders to foster a culture of agility and resilience for
innovation to flourish. Innovation does not happen in isolation. It thrives in an
environment where creativity is encouraged, risks are managed, and failures are seen
as learning opportunities. Fostering a culture of agility and resilience is paramount.
Different stakeholders play key roles in this process, each contributing their unique
perspectives and strengths.
For instance, our financial institutions are generally well-resourced and have
established risk management capabilities, providing them the ability to scale up in an
effective manner. On the other hand, fintech players are more agile with greater
flexibility to experiment newer forms of solutions and value creation. By harnessing
such synergies, we can welcome new ideas, challenge the status quo, and continuously
seek better ways to serve our customers and communities. This must come with
parallel efforts on your part to enhance innovative capacity and upskill talent, where
necessary.
To conclude, today marks more than just an event - it is a platform for growth and
collaboration. I urge everyone to actively participate, share your insights, and seize the
opportunities presented today. BNM stands committed to create a robust regulatory
environment where innovation can thrive within.
Thank you for being here and for your continued commitment to responsible innovation
and value creation. Let us embark on this journey of "Innovation Reimagined" together.