Whilst sustaining the current pace of development, growth prospect remains strong for the takaful sector, in view of the large untapped potential, where out of the 53.5 percent market penetration rate for both takaful and insurance, the market penetration rate for takaful was merely 10.9 percent in September 2010. The takaful industry indeed represents an important component in the overall Islamic financial system. Given its role in providing risk protection, the takaful industry offers a suite of financial products and services that complement the existing range available for consumers. In recognising its importance, focus has been given in developing a dynamic and vibrant takaful industry within our Islamic financial system. Where the industry is today has been an outcome of an accumulation of efforts in instituting a comprehensive Islamic financial landscape in Malaysia’s financial system. A strong institutional infrastructure and effective legal, regulatory and Shariah framework are the underpinnings of our Islamic  BIS central bankers’ speeches  1  financial industry. In our pursuit to develop Islamic finance, the recent enhancement to the Central Banking Act has accorded formal recognition to the existence of Islamic finance as an arm of the dual financial system, thereby giving significance and due prominence to Islamic finance. Moving forward, a number of initiatives are planned to further enhance the competitiveness and growth momentum of the takaful industry, emphasising on enhancement of the regulatory and supervisory framework and the Shariah governance framework.

2/3  BIS central bankers' speeches  Increasing incidents of data abuse on social media platforms, security breaches and cybersecurity threats can sow mistrust and confidence deficits in digital systems. In our respective markets, these incidents are likely to reveal gaps in existing data protection and consumer protection regimes and the need to explicitly address ownership rights and permitted uses of personal customer information. Prospects of digital profiling, and decisions driven by the use of complex algorithms can also result in financial consumers being unfairly discriminated against or targeted by unsolicited and unscrupulous marketing campaigns. Rather than delivering on its vast promise, digitalisation could instead become a polarising and divisive instrument. Take the provision of online credit, for example, the use of algorithm-based online credit scoring tools have led in some cases to assessments that are gender-biased, with female candidates consistently assigned lower credit scores compared to male counterparts of equal financial standing. Behaviourally, there is in fact evidence in Malaysia and likely elsewhere, to suggest that the opposite is true. We can and must do better. Proportionate laws and regulations must be in place to hold financial service providers accountable for establishing effective safeguards against the theft or abuse of personal data, and discrimination or unfair practices. The focus on consumer protection needs to shift from just addressing customer touchpoints, to the consideration of consumer needs much earlier in the product design process, in the formulation of distribution strategies or in the setting of risk limits.