adnan zaylani mohamad zahid : re - inventing payments - the future of financial services keynote address by mr adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the malaysian e - payments excellence awards ( meea ) 2019, kuala lumpur, 31 july 2019. * * * it is my pleasure to be speaking here today, at such an exciting time for our payments landscape. malaysia ’ s progress in migrating to e - payments has been promising. in less than a decade since 2011, we have reduced cheque usage by half to 101 million in 2018. e - payment acceptance points such as point - of - sale ( pos ) terminals have more than doubled to 16 terminals per thousand inhabitants in 2018. more merchants are also accepting qr payments with over 400, 000 registrations recorded to - date. meanwhile, e - payment transactions have almost tripled to 125 transactions per capita in 2018. at the same time, new business models are emerging. we estimate that 40 % of fintechs in malaysia are in payments or payment - related services – making it the largest segment. the ewallet space has been particularly vibrant, contributing to rapid growth in mobile payments. from 2017 to 2018, mobile payment transaction volume had increased twenty - fold from just below two million transactions to over 34 million transactions within a year. keeping these developments in mind, allow me to share three broad priorities in taking malaysia ’ s payments journey to greater heights. 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

the success of these new business models will depend on the industry players ’ ability to harness customer data to develop value - added services while ensuring compliance with data protection laws and regulations. this is key to enable greater customisation and offering of new services. for example, industry players that understand their clients ’ cash flow, turnover and supply chain can potentially identify new growth areas. these may include the provision of shortterm credit, insurance and wealth management services to customers and businesses. in harnessing customer data, there are clear synergies between existing and new players. incumbents have vast amounts of data, but legacy systems and culture can pose challenges to turn such data into insights. on the contrary, new players could face the opposite challenge – with more agile technological capabilities built from the ground - up, but having little or no data to work with. it is thus no surprise that more strategic partnerships between traditional and new players are emerging, in malaysia and abroad. such initiatives could foster vibrant ecosystems that could penetrate market segments that were previously underserved or unserved. similar opportunities are also possible on the cross - border payments sector amid increasing migration flows, global e - commerce and internationalisation of value chains. concerted industry efforts are imperative to bring the cross - border payment experience up to par with that for domestic payments. likewise, a customer - centric approach that goes beyond just payments can potentially be transformational. in an increasingly globalised economy, malaysian smes stand to gain significantly from crossborder payment innovation. better integration of payment services with regional or global ecommerce networks could expand market access. value - added features could also be embedded to eliminate existing frictions for cross - border trade. this may include digitising trade finance documentation and streamlining back - end processes of financial institutions and corporates to drive greater efficiency and expedite compliance process. future - proofing the payments landscape will be key moving forward finally, let me turn to the third key priority for payment infrastructures to be future - proofed. payment systems of the future must be inclusive and able to accommodate the speed of change for implementing new solutions at scale. in this regard, we have achieved a key milestone with the launch of the real - time retail payments platform ( rpp ) last year. it is designed to be more scalable, flexible and open to support new use cases such as proxy payments, request - to - pay, e - mandates and services to support more seamless customer onboarding processes.