KUALA LUMPUR: Technology can be a catalyst to propel finance as a great social equaliser in the future, says Bank Negara Malaysia (BNM) Governor Datuk Muhammad Ibrahim.
He said this was one of his five observations of things that might shape the development of finance in the future which also included influence of data and consumers needs and expectations to finance.
“Advancement in technology will enhance financial inclusion by addressing information asymmetry and reduce the cost of extending finance to previously under served groups,” he said at a ‘Teh Tarik’ session with Harvard Petronas Alumni here yesterday.
Muhammad said the enhancement of financial inclusion could grant access to around two billion people globally who remained unbanked today, enabling them to save, invest and uplift their livelihood.
The Governor added that technology would also be a catalyst in democratising finance in the future which would open up a vast spectrum of possibilities for new entrants.
“In the future, competitive advantage will come from those who are able to harness the power of technology and be bold enough to venture into uncharted territories,” he said.
He said data could be the ‘king-maker’ of finance as companies that were able to control and leverage on data to deliver superior customer experience would possess the greatest advantage.
“For the financial sector, this could potentially mark a highly interesting shift of mantra in the future from ‘cash is king’ to ‘data is king’,” he said.
Apart from technology, he said shifts in consumer needs and expectations would also play a key part in the finance revolution and finance and business models would need to be redeveloped around changes in consumers’ lifestyles and expectations.
“For example, mobile banking in its traditional sense does not work anymore in this country as smartphone penetration is quite high and the public is generally receptive to new ideas and innovation,” he said.
Muhammad also shared his opinion on the possible future scenario of finance, among others, called “Tech-Savvy Incumbent” whereby the pace of technology adoption by incumbent banks were high while the level of fragmentation among finance providers were low.
“In this scenario, although we will not see a dramatic change in terms of players in our financial system, the functions and ways in which they conduct businesses will be dramatically different,” he said.
Another scenario, he said was called “Plugged-in Finance” whereby technology adoption by incumbent banks and fragmentation among finance providers are high. — Bernama