encik abu hassan alshari yahaya : preserving the safety and security of malaysia ’ s banking system speech by mr encik abu hassan alshari yahaya, assistant governor of the central bank of malaysia, at the launch of the e - banking fraud awareness campaign, kuala lumpur, 15 january 2013. * * * it is my pleasure and honour to be invited to launch this joint e - banking fraud awareness campaign. i would like to thank the association of banks in malaysia for this invitation and the coordinated efforts in undertaking this important awareness campaign. a significant initiative this campaign is indeed a very important initiative for the banking industry in malaysia. this is the first time that all banks have come together in a concerted effort to help create greater awareness of online fraud with the cooperation of cybersecurity and the police force. this is to be lauded as all stakeholders have a role to play in preserving the safety and security of the banking system. maintaining confidence in online banking services online transactions have been growing at a rapid pace over the years. over the last decade, the use of electronic payments has increased at an average annual growth of 23. 4 %. in 2012, malaysian households and businesses performed more than 300 million financial transactions with a value close to rm15 trillion via electronic channels comprising mainly funds transfers, bill payments, top - up for prepaid cards, purchases of phone cards and payments for investments in the capital market. among the electronic channels, internet banking is the most popular. fundamental to the growth of internet banking over the years is the confidence which the public has in its convenience and security. this is something that we cannot take for granted and must be continuously preserved. advancement in technology and innovation has resulted in greater consumer convenience and enhanced efficiency. however, the same technology and innovation have also created new methods of perpetrating fraud that could be executed faster and with greater reach. cyber criminals have been active ever since the advent of the internet, and are constantly finding new ways to defraud innocent victims. safety and security of transactions in the banking system is fundamental in ensuring consumer confidence. hence, an important function and responsibility of the central bank is to ensure online transactions can be made in a safe and efficient manner in the economy, in the pursuit of monetary and financial stability objectives. the need for constant vigilance & cooperation this fight that the banks are launching today is something that requires the support of all parties. we are aware of the creative ways in which criminals have attempted to decei

undertakings, can be an effective way to tailor supervisory responses to risks at the institutional level. third, we need to recognise that regulation is as much an art as it is a science. experience suggest that authorities should prioritise rules that are appropriate for their jurisdictions, and at the same time, allow room for regulatory and supervisory discretion to respond to emerging and specific risks. this is important if we are to reconcile and balance the trade offs between the practical limitations that regulators face, the desire to avoid excessive regulation, and the need for authorities to act to mitigate risks. the exercise of regulatory discretion should be subjected to appropriate rigour and accountability. and it should be supported by a stronger focus to develop regulatory experts, rather than just more regulations. this requires deep knowledge of the industry, but also wisdom and discernment. in the current state of constant change, building the capacity of supervisors is one of the most critical priorities to guard against threats to stability without impeding growth and innovation. finally, we need to create room for experimentation. while rules are not meant to restrict innovation, they often have the effect of doing so. this might end up leaving customers worse off, 4 / 5 bis central bankers'speeches and insurers exposed to higher business risks than necessary or appropriate. when faced with the stark choice of doing nothing and risking harm to public interests, or writing rules to control something that we do not yet fully understand, it is only sensible to experiment and learn from it. this point is also crucial, when technology offers so much potential to increase financial inclusion. platform - based solutions and insure - tech companies are opening up insurance access to large segments of the population at a fraction of previous costs. to fully benefit from such possibilities, some regulators have adopted “ regulatory sandboxes ” to test solutions and design regulations that are appropriate. there will no doubt be other approaches taken to experiment and innovate. and when things do not work, we must be prepared to change tactics and strategy. conclusion over the last few decades, the global regulatory community has come together to build stronger supervisory systems and more resilient markets. insurers have built extensive networks in their pursuit of growth. now is the time to build on these foundations and further strengthen them, with a renewed commitment and focus on increasing the utility and impact of insurance. in a journey of many twists and turns, the iais has been incredibly fortunate to have secretary general yoshihiro kawai at its helm,