Greater scope to enhance inclusivity and quality of e-payment adoption The first priority is to improve the quality of our e-payment migration to be more inclusive, broadbased and sustainable. The good progress so far means that Malaysia has a solid foundation for more widespread adoption of e-payments. E-payments are increasingly prevalent, with adoption picking up across a wide range of use cases. A wider network of merchants is also increasingly open to accepting e-payments as a possible driver of efficiency gains and revenue growth. Importantly, these encouraging developments have been contributed, in part, by the market reforms and incentive structures implemented since 2013. These measures have corrected market distortions and facilitated the pooling of industry resources to continuously enhance the payment infrastructure and services. Nonetheless, there are opportunities for more inclusive and broad-based adoption. Studies have shown that cash usage is still prevalent with more than 80% of Malaysians reportedly using cash in a majority of their everyday spend such as F&B, groceries and fuel. E-payment adoption is also uneven across geolocation and is largely concentrated in the urban centres. This calls for greater efforts in two key areas to address such market gaps. The first key area is to significantly expand merchant acceptance, with a focus on lower-tier merchants. E-payment acceptance points are not yet ubiquitous, especially among microenterprises that are frequented by many Malaysians, such as wet markets, night markets and hawker stalls. In this regard, solutions that are ‘infrastructure-light’ could go a long way in boosting e-payment acceptance among micro-enterprises who are cost-sensitive.

However, we should not forget that the real economy and the financial economy are largely two sides of the same coin. Without one, the other would not exist. Financing is a key element for economic activity, and channelling such financing is precisely where we need the banking sector. We have once again been able to witness this owing to COVID-19. As you will recall, the financial sector was declared an essential service during the lockdown. And, for example, without banks’ active participation, it would not have been possible to successfully structure the ICO guarantees programme. Naturally, mobilising the resources needed for this transformation, which the law estimates at around € billion, will necessarily involve public-private investment formulas in which banks will no doubt play a key role. As you can imagine, financing these public-private investment needs is reason enough for the banking system to become involved. But initiatives such as the climate agreement signed on the occasion of the COP25 and the launch of FinResp (Centre for Responsible and Sustainable Finances) show that the sector is clearly committed. How can the financial economy contribute to switching the real economy towards full decarbonisation? The response is straightforward: through correct risk measurement. When banks manage their risks properly, they are promoting the effective allocation of available economic resources, by distinguishing between those projects more likely to succeed and those not viable in the medium term.