Fintech and Digital Financial Services Gain Momentum in Brunei

Fintech and Digital Financial Services Gain Momentum in Brunei

by April 3, 2024

The significance of fintech is rising within Brunei’s economy, driven by increased efforts from both the public and private sectors to leverage technology to enhance financial services, improve accessibility and drive economic growth.

At the Britain Brunei Business Forum’s “Brunei’s Fintech Future” in late-2022, Brunei’s Deputy Minister of Finance and Economy at the Ministry of Finance and Economy, Dato Seri Paduka Haji Khairuddin bin Haji Abdul Hamid, said in his keynote address that the country was seeing rapid advancements in fintech, with increased adoption of digital insurance, mobile payments, and cashless transactions in both public and private sectors.

“More businesses are accepting cashless payments beyond debit and credit cards, such as Quick Pay, Progresif Pay and Pocket,” Dato Seri Paduka Haji Khairuddin said, quoted by local newspaper the Borneo Bulletin.

“Fintech is also transforming the public sector, with cashless payments being featured in e-Darussalam for services such as vehicle license renewal. Fintech has also facilitated entrepreneurship, allowing small businesses to set up without the need for major financial infrastructure investments thanks to mobile banking services.”

Banks embrace new technologies

With digital payment transactions increasing by a staggering 87.8% over the past five years, local banks are waking up to the digital imperative, ramping modernization and digitalization efforts to keep up with evolving customer expectations, improve efficiencies and remain competitive in the face of heightened competition from digital challengers.

In July 2023, Bank Islam Brunei Darussalam (BIBD), one of the country’s largest lenders, announced its intention to transform into a digital-first bank, the Borneo Bulletin reported. By the end of the decade, BIBD aims to have a majority of its customer relationships, including new onboarding, cards, savings accounts, financing, securities, and other financial services, conducted digitally in a unified applications ecosystem.

Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah, chairman of BIBD Group and the incumbent second Minister of Finance and Economy II and the Minister at the Prime Minister’s Office of Brunei, highlighted the bank’s commitment towards full digital transformation at the launch of BIBD At-Tamwil Berhad‘s new Olive mobile banking app.

“This digital transformation will enable us to provide our customers with greater convenience, security, and accessibility to our financial services, promote inclusivity, while ensuring that we remain at the forefront of an evolving banking industry that’s rapidly turning digital,” Dato Seri Setia Dr Awang Haji Mohd Amin Liew said in his speech.

“We will continue to enhance our system to modernize and adopt the highest global standards for safety, security, and availability by 2025. These advancements will help BIBD to expand and synchronize its operations outside Brunei.”

The Olive app is the first of its kind in Brunei offering digital signature and digital contract, the executives said. It also features real-time financing approvals, and non-face-to-face customer onboarding through electronic know-your-customer (eKYC) technology.

Junaidi bin Haji Masri, BIBD At-Tamwil Berhad’s chairman and BIBD’s managing director and CEO, mentioned the alignment of BIBD’s digital transformation with national objectives outlined in the central bank’s Financial Sector Blueprint 2016 – 2025, a strategy focusing on developing Brunei’s financial services sector and compete with developed regional competitors.

Public efforts to boost Fintech in Brunei

Released in 2016, the Financial Sector Blueprint 2016 – 2025 outlines the framework and measures to develop the financial services sector, identifying five key pillars to creating a sustainable financial ecosystem namely: monetary and financial stability; competitive and innovative financial institutions and services; robust and modern infrastructure; enhanced international integration; and human capital development.

The strategy aims for the financial sector to contribute to at least 8% of Brunei’s national gross domestic product by 2025. Fintech development and technology are identified as key enablers of growth in this regard.

Adding to the Financial Sector Blueprint 2016 – 2025 is the Digital Economy Master Plan 2025. The development plan, announced in 2020, aims to propel the nation towards becoming a smart nation through digitalization across various sectors. It comprises four strategic thrusts, including government digitalization and information and communications (ICT) development, and emphasizes nine priority areas including financial services, business services, health and education.

Notable flagship projects under the Digital Economy Master Plan 2025 include the National Information Hub (NIH) Project, the Digital Identity Project, and the Digital Payment Hub Project. These initiatives aim to enable secure data sharing and usage, provide access to government services online, and allow seamless and instant transactions between consumers.

Progress has been made in the NIH Project, which is already seeing the involvement of multiple government stakeholders. However, challenges remain, with the Digital Identity and Payment Hub Projects not yet ready for implementation. Additionally, Brunei still lacks a specific data protection legislation or statutory law, a regulatory shortfall that has hindered business opportunities involved in collection, use, disclosure, and other processing of personal data.

Flagship projects under the Digital Economy Master Plan 2025, Source: Digital Economy Council, Brunei, 2020

Flagship projects under the Digital Economy Master Plan 2025 including initiatives to drive fintech in Brunei Source: Digital Economy Council, Brunei, 2020

These projects build on previous initiatives by the government to modernize the financial services sector. In 2014 and 2016, Brunei established the a real-time gross settlement system and an automated clearing house. This was followed in 2017 by the launch of a Fintech Regulatory Sandbox and the set-up of the Fintech Office to stimulate innovations in the financial sector.


Featured image credit: edited from freepik