Plugging our fintechs into the DFTZ opportunity
With the way Malaysian spending habits are evolving, not to mention how quickly the electronic payments landscape is evolving with entrance of powerhouse Chinese players like Ali Pay, local regulation has their work cut out for them.
Some existing regulations are not relevant anymore during these times of prevalent digital payments, and yet, regulations may not be receiving the due diligence they deserve to adapt to current trends and better serve the industry!
For the financial services industry, as well as securities and insurance sectors, there is already a huge influx of technology players disrupting the digital payments landscape worldwide.
Technology is allowing these sectors to become more efficient, and even to merge and work seamlessly together, but regulation isn’t able to keep up.
And in Malaysia, there are at least three different regulators – Securities Commission, Bank Negara and Bursa Malaysia – governing these sectors.
According to a veteran IT professional who has worked in the financial sector for many years, “There is no clarity about who owns what (jurisdiction) and regulation from all three is inconsistent.”
The lack of a unified effort seems to point to larger forces at play that are staying the hands of the regulators to do what they are tasked to do – it is interesting to note, none of the regulators have publicly announced their support of financial tech startups.
This could be also due to their protectionist attitudes towards our local banks.
More recent developments
Prime Minister Datuk Seri Najib Tun Razak just last week had announced the digital free trade zone (DFTZ), and there was a lot of grand fanfare with even world-renowned entrepreneur Jack Ma gracing the occasion with his presence.
Our PM expressed his wish for the DFTZ, “We want to help SMEs overcome the complex regulations, processes and barriers, and eventually further encourage businesses and traders to connect and collaborate in cross-border trading.”
Korean e-commerce player 11Street views this as a good thing and its CEO Kim Hoseok said, “The trade zone will serve as gateway to the ASEAN market and allow local products to tap into a wider market.”
Malaysians with their thumbs ever-ready on their smartphones are all too happy to increase purchases using the online medium, and this will help thrive the ASEAN economy for sure. So, it would seem that things are about to heat up on the commerce front, and even the e-commerce and mobile commerce front
As a result, more parties have to enter the mix to govern and regulate the e-commerce and mobile commerce industry, namely MDEC, MCMC and Cybersecurity Malaysia (CSM).
A reliable source has shared that there was enough concern for a briefing about mobile commerce security to be called for. However, this meeting which will comprise of the Securities Commission, Bank Negara, Bursa Malaysia, CSM, MCMC and MDEC, has yet to take place.
With more ‘chefs’ to cook a murky broth, what are the chances of an effective, comprehensive and actionable consensus?
And what about our fintechs?
Our local banks are doing the necessary to keep up with the times, but they are doing so by hooking up with big foreign fintechs like AliPay. Given the entry of big foreign fintechs into the Malaysian market, where does that leave our local fintechs?
How can our local boys become relevant and thrive in this crowded space? If the local banks could collaborate more with them, wouldn’t we see a flourishing market for the startup fintechs?
After all, Malaysian banks and regulators should be supporting our own Malaysian startups, right?