Bank Negara Malaysia today issued details of Fintech Regulatory Sandbox Framework following a one month consultation on the proposed Framework which was released on 29 July 2016. The regulatory sandbox will enable the experimentation of fintech solution in a live environment, subject to appropriate safeguards and regulatory requirements.
Over 60 comments and suggestions were received from various stakeholders including financial institutions, fintech companies, associations and other corporates. Following the comments and suggestions received, the Bank has expanded the eligibility criteria to clarify the focus of innovations that the sandbox aims to support. Innovations should have clear potential to:
i. improve the accessibility, efficiency, security and quality of financial services;
ii. enhance the efficiency and effectiveness of Malaysian financial institutions’ management of risks; or
iii. address gaps in or open up new opportunities for financing or investments in the Malaysian economy.
The minimum standards and requirements for participation in the sandbox were also reviewed to encourage wider participation of fintech companies. Applicants to the sandbox should be able to demonstrate that a product, service or solution has been developed to a functional stage and is ready for testing. The applicant must also have a good understanding of risks during testing, with adequate resources committed to effectively manage the risks.
Bank Negara Malaysia. Source: Wikipedia
The Bank will inform applicants of their eligibility to participate in the sandbox within 15 working days of receiving a complete application. This will be followed by preparatory engagements between the Bank and the applicant prior to testing.
Mr Aznan Abdul Aziz, Chairman of Financial Technology Enabler Group said, “The Framework reflects the Bank’s long standing policy in striking an optimal balance between promoting innovation whilst preserving financial stability and protecting consumer interest. Based on the level of queries and feedback received during the consultation period, the Bank is encouraged and looks forward to receiving applications to test new ideas and deploy new solutions under the sandbox”.
The finalisation of the Framework aims to provide an environment that is conducive for the deployment of financial technology to foster innovations in financial services that can contribute to the growth and development of Malaysia’s financial sector.
The Framework will take effect immediately and is now open for application.
The Fintech Malaysia Framework can be read here.
