Digitisation offers enormous potential for financial sector

KUALA LUMPUR: Digitisation offers enormous potential for the financial sector to achieve what was not possible before, said Bank Negara Malaysia Deputy Governor, Jessica Chew Cheng Lian.

She said the transition to a digital economy itself called for a re-orientation of the financial sector to meet the new business demands for financial services and on both counts, the financial industry could, and in fact ought to be, powerful agents of change.

“With a little ingenuity, digital finance can unlock new growth opportunities that were previously deemed to be not commercially viable.

“Indeed, disruptive innovations – whether in banking or beyond – often begin at the fringes of the market, such as the underserved and unserved segments,” she said at the Asian Banker Digital Finance Convention 2018 here yesterday.

Chew said the changing market dynamics raised some important strategic questions for banks – including how banks would choose to fundamentally approach competition, what this meant for existing business models, and what outcomes this would entail both in the short and longer term.

“One strategy has been to leverage opportunities for collaborations – whether among existing players or new entrants. We see this emerging as an increasingly important, if not inevitable, response globally on several fronts,” said Chew.

In the blockchain space, Chew said, the industry in a number of jurisdictions has pooled resources to defray the costs of experimentation involved in developing scaleable use cases for the technology’s application.

In Malaysia, she said, nine banks had done this by coming together to develop blockchain applications for trade finance.

She said the financial sector was arguably better positioned than most to transition its workforce as job profiles changed in response to technological disruptions.

“For one thing, the financial sector has already been moving for a while in the direction of higher skilled jobs. Over the past three years, 91 per cent of total jobs created in the financial sector were in high-skilled positions.

“As at the end of last year, high-skilled workers continued to comprise the majority of the workforce – representing 74 per cent of the banking sector employees and 83 per cent of the insurance/ takaful sector employees,” said Chew.

Chew said there was a vast range of possibilities and challenges would open up for the world of finance to deliver stronger, higher quality and more inclusive growth.

“Individually and collectively, we will face stark choices that will shape the future of financial services in Malaysia and it is critical that we move forward thoughtfully to ensure a financial system for the ages and for all segments of society,” she said. — Bernama