muhammad bin ibrahim : development and deployment of malaysia ’ s atm network speech by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the launch of meps ( malaysian electronic payment system ) atm initiative, kuala lumpur, 21 october 2013. * * * pooling of resources through meps the launching of meps ’ atms marks an important milestone as this will be the first time that meps, a non - bank entity owned by the banking industry, is deploying atms, instead of by individual banks. this initiative is indeed a welcomed move as it facilitates the pooling of resources by the banking industry for a common objective of developing and deploying industry - wide banking infrastructure. it promotes efficiency and cost effectiveness. widening the atm network through shared resources will also benefit the public by having more convenient points of access to banking products and services. meps had in the past a history of coordinating industry - wide infrastructure development efforts. an outstanding achievement was made when it coordinated the industry - wide migration of the atm cards from magnetic stripe to chip - based technology in 2001 to eradicate the numerous fraud involving magnetic stripe technology. this move was a significant strategy for the country, as malaysia was amongst the first, to adopt a chip - based technology to reduce fraud and boost public confidence in the use of the atm and payment cards. meps should continue to perform this role, as builder of payment infrastructure for the banking industry. as an industry, banking institutions should continue to share infrastructure cost and compete on providing quality products and services. basic payment infrastructure should not be a tool for competitive edge but rather as a means to reduce cost and adopting common standards. migration to e - payments to achieve cost savings accelerating the migration to e - payments is one of the key strategies in the financial sector blueprint. on numerous occasions we had highlighted that a successful migration has the potential to drive further efficiency gains and cost savings. it will improve the country ’ s competitive position. research has suggested that successful migration to e - payments can save the country in terms of costs ( of about 1 % of gdp annually ). today, cheques and cash remain prevalent in malaysia. based on the last 3 years data, an average of 205 million cheques totalling to about rm2 trillion were issued on an annual basis. our preliminary estimates showed that at rm2. 70 cost per unit, the banking industry spends at least rm544 million annually on extending cheques issuing services. this is an expensive way of

two key areas of human capital development and catalysing greater harmonisation of shariah interpretations. the availability of talents who are skilled in both the financial and shariah fields have been essential in invigorating innovation and dynamism of islamic finance in malaysia. this is reflective of our long - held conviction that sustainable growth of islamic finance could not be achieved without adequate attention to the development of intellectual resources. it is out of this conviction that malaysia has committed resources to support the broadening horizon of growth in country and beyond, through the deepening of knowledge and competence among financial practitioners and shariah scholars within the industry. for this purpose, malaysia has established the international centre of education in islamic finance ( inceif ) to support advanced education in islamic finance, while, the international shariah research academy ( isra ) was founded to promote research and rigorous intellectual dialogue among shariah scholars and practitioners on islamic finance. let me now turn to the development of our legal framework, which has been one of the key factors contributing to the competitiveness of islamic finance in malaysia. our legal infrastructure consists of effective regulatory and substantive laws, as well as dedicated adjudicative platforms to undertake legal redresses arising from disputes revolving around islamic financial transactions. the legal infrastructure in malaysia evolved in different phases over the years. our initial focus was to establish dedicated enabling substantive laws for islamic finance, such as the islamic banking act 1983 and takaful act 1984. the enactment of these laws provided the platform for separate regulatory framework for the industry and importantly, established the foundation of the shariah governance framework through two key provisions. these are the requirements imposed on islamic banks and takaful operators to ensure that their business aims and operations are shariah - compliant and the need to form separate shariah board within their respective institutions. our experience has shown that dedicated laws governing institutions authorised to conduct islamic finance are critical elements in instilling and maintaining public confidence in the system. after establishing the necessary legislative measures to establish a more conducive environment for islamic finance to thrive, the next phase was aimed at creating the critical mass which was essential to develop islamic finance in malaysia. amendments were made to the banking and financial institutions act 1989 to allow the conventional banks to operate islamic windows which brought about new players in the industry. at this stage we also saw the establishment of the national shariah advisory council ( sac ), the highest authority on shariah matters related to islamic