## Malaysia: Selected Issues

_IMF Staff Country Reports, February 28, 2020_

## Source details

**Canonical URL:** [Malaysia: Selected Issues](https://www.imf.org/en/publications/cr/issues/2020/02/27/malaysia-selected-issues-49106)

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## Bibliographic details
- Published: February 28, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513531960.002

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### Executive summary
- Investigates impact of financial technology (FinTech) on Malaysia’s financial sector.
- Malaysia is digitally enabled to seize the opportunities brought by FinTech.
- Malaysian banks continue to dominate in deposits, lending and capital raising, but have been gradually reducing their emphasis on physical distribution networks.
- The top five Malaysian banks have increased their technology-related spending over the past three years.
- Regulators have been mindful of developments outside of the traditional regulatory perimeter that could pose financial stability risks.
- Rapidly evolving technology is likely to bring multiple challenges to the financial sector.

### Key findings
- Digital readiness: Malaysia is positioned to take advantage of FinTech-driven opportunities.
- Banking sector structure:
  - Banks remain dominant in deposits, lending and capital raising.
  - There is a gradual shift away from physical distribution networks.
  - The top five Malaysian banks increased technology-related spending over the past three years.
- Regulatory landscape:
  - Developments outside the traditional regulatory perimeter may pose financial stability risks.
  - Regulatory requirements are an important component of operating in the FinTech space.
  - Regulators must balance financial stability and consumer protection with promoting innovation and competition.
- Capacity building:
  - Bank Negara Malaysia has spearheaded various initiatives to address the lack of regulatory acumen among FinTech industry players.
- Sectoral scope:
  - A key regulatory challenge is to balance benefits and downside risks in both conventional and Islamic finance.
- Supervision and regulation:
  - Frequent refinements to regulations and supervision are required to keep pace with the highly dynamic nature of FinTech.

### Policy recommendations and implications
- Maintain balance between:
  - Ensuring financial stability and consumer protection.
  - Promoting innovation and competition in FinTech.
- Strengthen regulatory reach:
  - Monitor and address risks arising outside the traditional regulatory perimeter.
- Enhance regulatory capacity:
  - Continue initiatives to raise regulatory acumen among FinTech participants.
- Dynamic regulatory approach:
  - Implement frequent refinements to regulation and supervision to align with rapid technological change.
- Consider dual-framework risks:
  - Design regulatory responses that address both conventional and Islamic finance implications of FinTech developments.

### Publication and metadata
- Pages: 21
- Volume: 2020
- Issue: 058
- Series: Country Report No. 2020/058
- DOI: https://doi.org/10.5089/9781513531960.002
- Stock No: 1MYSEA2020002
- ISBN: 9781513531960
- ISSN: 1934-7685
- Subjects: Banking, Digital currencies, Financial services, Fintech, Islamic finance, Mobile banking, Technology
- Keywords: Asia and Pacific, bank-Fintech partnership, Co-working space, CR, Digital currencies, Fintech, FinTech Association of Malaysia, Fintech firm, FinTech in Malaysia, firm, Global, ISCR, Islamic finance, Islamic FinTech, Malaysia, Mobile banking, Southeast Asia, start-up, tech company

*Source: Malaysia: Selected Issues (IMF Staff Country Report No. 2020/058).*

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## Content in this bundle

- **Malaysia: Selected Issues; IMF Country Report No. 20/58; January 23, 2020**
  - [Malaysia: Selected Issues; IMF Country Report No. 20/58; January 23, 2020 (Markdown version)](/-/media/files/publications/cr/2020/english/1mysea2020002.pdf.md){rel="alternate" type="text/markdown"}
  - [Malaysia: Selected Issues; IMF Country Report No. 20/58; January 23, 2020 (PDF)](/-/media/files/publications/cr/2020/english/1mysea2020002.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2020/02/27/malaysia-selected-issues-49106_