Fintech is viewed as new initiative to 10-year plan

PETALING JAYA: The mid-term review of the financial sector blueprint has considered financial technology (fintech) as a new initiative to achieve the objectives of the 10-year plan as it will extend the provision of financial services beyond the traditional purview of banks.

“Fintech also has the potential to fundamentally change the way financial services are delivered and consumed.

“The bank expects the growing adoption of fintech to have wide-ranging implications for areas such as payments, financial inclusion, Islamic finance, consumer protection and money services business.

“Going forward, fintech will also impact the composition and types of jobs that will be offered in the financial sector.

“In particular, labour-intensive tasks that are repetitive and predictable in nature are at high risk of being automated.

“While the net impact of fintech on jobs is still inconclusive, it is imperative for the industry to re-skill and up-skill the current workforce with technology-complementing competencies in order to reap the gains from technological adoption, while mitigating its disruptive impact on the workforce,” said Bank Negara in its report.

Launched on Dec 21, 2011, the financial sector blueprint sets out a 10-year strategic plan to increase the resilience, efficiency and competitiveness of Malaysia’s financial sector.

Overall, after five years, the midterm review of the blueprint has identified that the sector has positively contributed to the country’s economy.

“The real value-added of financial services to gross domestics product (GDP) stood at over RM75.3bil last year, accounting for 6.8% of real GDP.

“Over the 2011-2016 period, the value-added of the financial sector expanded at a compounded annual growth rate of 2.7%.

“Growth has, however, been more moderate in recent years, mainly due to the challenging economic environment, leading to lower growth in both lending and capital market activities, amid heightened competition,” said the report.

Additionally, as at end-2016, the report said the financial sector employed close to 164,592 people, with 6,100 additional jobs created since the first quarter of 2013.

This accounts for about 3% of total employed workers in Malaysia.

High-skilled professionals make up 74% of financial sector employees, a sector considered as having higher productivity and knowledge-based.

“Reflecting this, average salaries in the financial sector grew by an average rate of 11.4% between 2013 and 2016, amounting to RM7,790 per month (per worker) in 2016 while productivity increased at an average rate of 4% over the same period,” it said.

The central bank noted that there were still significant potential for growth despite the significant progress made.