Zeti Akhtar Aziz: Strengthening Malaysia's financial system
Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the launch of
the Finance Accreditation Agency, Kuala Lumpur, 6 September 2013.
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It is my great pleasure to join you this morning on the occasion of the launch of the Finance
Accreditation Agency. The establishment of the Finance Accreditation Agency (FAA) is part
of the efforts to strengthen the financial system as it continues to evolve in a rapidly changing
environment. The change in our financial system in this recent decade since the Asian
financial crisis has been transformational. It has encompassed major structural reforms in the
banking sector, the development of a deep and vibrant securities market which has now
assumed a key role in financial intermediation, the growth of Islamic finance and the
modernisation of the insurance sector. The regulatory and supervisory structure and
approach has also evolved to become more risk-focused, more aligned with efficient capital
and financial markets, and less reliant on prescriptive and direct controls. This has fostered
greater innovation and competition in our financial system, while preserving strong incentives
for prudent risk-taking. This has been reinforced through the supervisory oversight and
increased market transparency. The evolution of business and distribution models has
followed, with significant gains achieved in efficiency, greater financial inclusion and a more
dynamic and responsive financial industry to better serve the economy. In addition, our
financial system has become more global in its orientation, in turn lifting Malaysia's economic
potential.
The strategic importance of human capital has been central to this transformation. The
quality of human capital has become a key driver and enabler of the change in this recent
decade, with greater emphasis on productivity, and on elevating the skills and competencies
of the talent pool in the financial industry. Today, the financial sector workforce in Malaysia
has the highest total-factor productivity growth relative to other sectors of the economy.
Employment growth in the financial sector has also been in the higher skilled roles. This
accounts for the higher level of wages in the financial sector which is more than one and half
times the national average. Financial services employees are also generally educated to a
higher level, with higher expectations for individuals in key and senior-level positions within
the industry to hold post-graduate or professional qualifications, in addition to relevant work
experience.
Going forward, the human capital imperative will increase in importance - for the financial
industry to sustain and reinforce the strong foundations that have been built, and to take the
industry to a new level of depth and maturity, with greater resilience. Accreditation has an
important role in meeting this imperative.
Although it is only being officially launched today, I am greatly encouraged by what FAA has
already been able to achieve in just slightly over a year of full operations. Some of you may
know that FAA had its beginnings as a division within the Asian Institute of Finance, to review
the quality of programmes being offered by AIF's affiliated institutes. As the components of a
quality assurance framework and process started to come together under the AIF, it became
clear that in order to realize the vision of a highly competent and high performing workforce
in the financial sector, assuring the quality of the learning programs that serve the industry
was vital. This led the Board of AIF to take the decision to establish an independent entity
which would spearhead and develop this important role to its full potential.
That decision was motivated by two objectives. The first was to ensure that the quality
assurance function would be fully independent of any interests in program development or
delivery. This is necessary to provide a high level of confidence to the industry which should
be able to rely on quality assurance assessments as a basis for decisions on training and
development priorities. As a separate agency with a transparent governance structure in
place, FAA has been able to build a high level of credibility in providing an independent,
objective assessment of the quality of training and development programs in meeting defined
learning objectives.
The second objective was the desire to contribute towards raising standards on education
and development in the area of financial services. As a separate agency, FAA's role extends
beyond the program offerings of IBBM, MII, IBFIM and SIDC which are the affiliated institutes
of AIF. I understand that FAA has already attracted both global and regional interests in its
accreditation services, including from the UK, Asia and Middle East regions. FAA's current
work to develop a qualifications structure that will link the various qualifications relevant to
financial practitioners under a cohesive framework is also strategically significant. Such a
structure will allow for the mutual recognition of qualifications and provide clear and
systematic learning pathways for financial professionals. This is important to meet the
increasing demand for talent in the financial services industry - not just in terms of numbers,
but also in the quality.
I would also like to take this opportunity to acknowledge the critical role of the industry in
enabling the FAA to meet its objectives. Ultimately, the value of the accreditation process lies
in its ability to ensure that the educational foundations for professionals employed in the
industry are preparing them adequately for their roles. The involvement of industry
practitioners on the various accreditation committees and panels of the FAA provides that
essential link to close the gaps between what the industry needs, and the training programs
being offered. It also provides a platform for practitioners and training providers to engage on
the future needs of the industry and the ways in which these needs can be met through
professional education and training. If the talent requirements of the financial sector are to be
effectively addressed and managed, the industry cannot be a spectator. It is acknowledged
that there are already many practitioners who are already serving on the Accreditation
Technical Committees and the Board of FAA from different parts of the world, who have
committed their valuable time, experience and knowledge to this important initiative. These
will be important contributions as the industry continues to develop and mature.
On that note, let me once again congratulate the Board and management of FAA on this
occasion of its official launch. Bank Negara Malaysia together with the Securities
Commission fully supports the FAA in its important role. I am confident that the FAA will have
a significant impact in the efforts to sustain a strong talent pipeline for the financial sector in
this more dynamic and challenging environment ahead.