Balancing Innovation, Competition and Consumer Protection for Financial Services Institutions in Digital Era

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1 Balancing Innovation, Competition and Consumer Protection for Financial Services Institutions in Digital Era Prof. Dato Dr Azmi Omar President & Chief Executive Officer 4 July 2018 INCEIF 2017 A member of AACSB INCEIF 2018 International Centre for Education in Islamic Finance International (INCEIF) Centre (Company for Education No K) in Islamic Finance (INCEIF) (Company No K)

2 About INCEIF INCEIF 2017 A member of AACSB

3 OUR MANDATES Supply Human Capital Facilitate development of competent talent & enhance the quality of human capital for the global Islamic Finance industry Centre for IF Research To be a centre for research work, consulting & publication and a reference point for solutions delivery for local and global market ALUMNI Today there are 1,561 agents for change in the world from INCEIF. Some of them are already making meaningful contributions to the advancement of Islamic finance at all levels be it product development, policy framework and implementation; regulation and enforcement; and innovation. 1,561 RESEARCH FACULTY 26 subject matter experts in Islamic Finance (including Adjunct Professors) 95% of our faculty sits on various boards, advisory councils 3

4 Disruptive Changes - Digital Innovation and Fintech Did you know? The World Economic Forum, the authors of the 4 th Industrial Revolution, estimate the global investment in digital infrastructure requirements from Community Service Providers (CSPs) alone at USD300 Billion per year, and growing steadily at 10%. 4

5 FINTECH. Is it the great leap forward for IF? 5 Source: The Pulse of Fintech Q2 17 Report Infographics Financial services and technology sectors intersect resulting in innovative product and services that enable, enhance and disrupt financial services. International Centre Title for Education in Islamic Finance (INCEIF) (Company No K) 5

6 Fintech is changing the landscape for financial services, providing more opportunities. Cheaper, simpler and more efficient financial solutions. 6

7 Transformation of role of finance Enabler than a provider of financial products and services Fintech Financial Services Easier access to finance and increased financial inclusion 6

8 Drivers of Fintech Growth Technology o Mobile phone Rising Consumer Expectations o Unmet demand by existing FIs, Demographics o Millennials, muslim millennials Investments in Fintech Aftermath of 2008 Global Financial Crisis o Collapse of trust and regulatory reform Growth of E-Commerce International Centre Title for Education in Islamic Finance (INCEIF) (Company No K) 8

9 INCEIF A member of AACSB International CentreTitle for Education in Islamic Finance (INCEIF) (Company No K) 9

10 Concerns & Challenges to Financial Institutions Competition: Fintech and main disruptive entities Threat to traditional financial institutions: Retaining customers The Solution? Partnering with Fintech companies Invest in research and development 6

11 Concerns & Challenges Data privacy and security Impact of Islamic Fintech Financial Exclusion -use of data mining may lead to cherry picking -price discrimination, e.g., interest charges Money Laundering terrorism financing risk Liquidity Risk and volatility of bank funding sources Financial instability High Operational risk Systemic risk Liability : Liabilities from fraud and other illegal activities 6

12 Thank You. Prof. Dato Dr. Azmi Omar President & Chief Executive Officer INCEIF 2017 A member of AACSB

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