Governor Dr. Zeti Akhtar Aziz had proposed a regional forum to exchange experiences and understanding amongst central bankers and financial policy makers on issues such as institutional structure, regulatory framework and supervision requirements and the application of technology for promoting access to financial services. Branchless banking offers the means to provide the full range of financial services such as payments, deposits, credit and micro-insurance services without the use of physical bank branches, thus reducing significantly the cost structure. The financial services could be provided through mobile telecommunications networks or network of non-bank intermediaries, such as supermarket chains or post offices. For the purposes of this Forum, I would like to focus my remarks on three key areas. Firstly, how payment systems technology is supporting branchless banking to improve access to financial services. Secondly, the policy and regulatory concerns pertaining to branchless banking. Thirdly, Malaysia's experience in developing a more inclusive financial sector and supporting branchless banking activities. Payment systems technology for branchless banking The most critical enabler of branchless banking relates to the role of payment systems technology, principally the use of mobile phone as a banking channel and payment device. The pervasive availability and use of mobile phone around the globe and familiarity amongst its users makes it a very cost-effective distribution channel to improve accessibility to financial services to the unbanked and underserved segment of the population.

Even if the non-bank players do not need to directly engage with these issues, they must have high degree of awareness in order to work effectively with their partner financial institutions. Measures taken in Malaysia to develop a more inclusive financial sector Allow me to now share Malaysia's experience in addressing financial inclusion and branchless banking. In Malaysia financial inclusion has been a high priority in our national agenda for many decades. Since the establishment of the Central Bank, there has been a conscious policy to have an extensive commercial banking branch network across the country, to ensure the outreach, in particular, to cover the non-urban areas. Malaysia now has 10.2 branches for every 100,000 individuals as opposed to the global median of 8.4 branches for every 100,000 individuals. In Malaysia, more than 80% of the population also have some form of savings account. This has also contributed to the financialisation of savings in the country. Deposits as a percentage of gross domestic product is 180%. This means that savings is mobilised even from small savers into the formal financial system. This allows the savings to be channelled to productive economic activity. To further drive the provision of basic financial services to the underserved, the National Savings Bank in Malaysia has been mandated in 2006 to enhance the outreach of deposit services and micro-financing. Their efforts, together with those of commercial banking institutions and government mandated micro-financing agencies, have resulted in a significant expansion of micro-financing.