Canada    FinTech Guide    Chapter 8    Malaysia

8. Online Banking Services
Malaysia  Malaysia

Both public and regulators are very receptive of the innovative changes within Online Banking Services.

Legal Affairs

In principal, only licensed financial institutions (“FI”) which have obtained prior approval from Central Bank Malaysia (“BNM”) may offer online-banking services as described above. However, in practice FinTechs can bypass this restriction by partnering FIs and hosting their services through the digital channels of the FI.

Alternatively, FinTechs may apply to participate in the Fintech Regulatory Sandbox (“Regulatory Sandbox”) by BNM . The Regulatory Sandbox is targeted at innovative solutions which are either wholly or partially incompatible with the existing regulatory framework administered by BNM. Approved participants of the Regulatory Sandbox will be given a 12-month period (or such other approved extension) to test its product, service or solution in the Regulatory Sandbox with such regulatory flexibilities, as may be granted by BNM. Upon completion of the testing, BNM will decide whether to allow the product, service or solution be introduced in the market on a wider scale; or to prohibit the deployment of the product, service or solution in the market .

Economic Conditions

We find that the market for online-banking services would be as big as the whole banking industry. It is understood that all major banks in Malaysia are actively looking to collaborate with FinTechs that can offer innovative solutions.

As at 2018, BNM has approved seven participants in the Regulatory Sandbox. Out of the seven approved participants, there are two approved participants that are made up of FI and FinTech collaboration. The two approved participants are CIMB Bank Bhd & Paycasso Verify Ltd, for e-KYC application and OCBC Bank Bhd & Moxtra Inc, for secured chat banking application.

Contributing Authors

Lee Hishammuddin Allen & Gledhill

Adlin Abdul Majid
Kuala Lumpur, Malaysia

Andrew Ean Vooi Chiew
Kuala Lumpur, Malaysia

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Chapter Index:

1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018