THE payment process of major technology companies (big tech) has grown by about 170% since the pandemic reached Malaysia, said Bank Negara Malaysia (BNM) Governor Nor Shamsiah Mohd Yunus.

She said this is due to its lower complexity and trust barriers, and universal demand.

Developmental policies have also eased the big tech payment process entry, including ones that foster interoperability through common national infrastructure and an open entry policy for new entrants in the payment sphere, she added.

“The big tech payment process has outpaced the overall growth in e-payments at about 20%. However, in terms of absolute value, it accounts for only a marginal portion of the overall value of e-payments at less than 0.2%.

“Online banking remains the dominant method of transferring value digitally in Malaysia. Beyond payment, the extent of big tech disruption in other financial services is still limited.”

Nor Shamsiah said the impact of big tech on a market is multifaceted and depends on factors such as demography, size of the market gap, strength of the incumbents and consumer satisfaction.

“We observe that a high level of financial inclusion and a core of strong and competitive incumbent financial institutions have narrowed the disruption potential of big techs, so far.”

Due to the emergence of new business models, BNM has had to respond to policy disruptions, which are compounded when they involve unclear or overlapping regulatory parameters across authorities, she added.

“This calls for the central bank to act as an advocate for holistic policy responses by broader public administration.

“For Malaysia, this includes the provision of services that transcend regulatory boundaries such as digital assets, which calls for coordination across different authorities. We have worked with the Securities Commission of Malaysia on this to clarify respective areas of oversight based on use cases.”

Nor Shamsiah said the emergence of business models outside the existing regulatory scope, particularly the “buy now, pay later” policy in retail lending, may compete with conventional banking.

“What we have done is we have advocated the introduction of a Consumer Credit Act, because the growth of this outside the banking sector can harm financial consumers, thus we have to ensure there is protection and fair treatment of borrowers.” – Bernama, October 9, 2021.