KUALA LUMPUR: The domestic banking sector is uniquely positioned to drive deeper cross-border financial integration across the region when Malaysia assumes the Asean chairmanship next year.
The Association of Banks in Malaysia (ABM) executive director Dr Amina Josetta Kayani said the domestic banking sector could play a pivotal role in three key areas: trade finance integration, wealth management expansion, and intensifying efforts to enhance cross-border payments efficiency.
On trade finance integration, Amina said Malaysian banks can leverage digital innovations such as blockchain-based trade finance platforms to streamline cross-border trade processes.
“By simplifying trade documentation and standardising regulatory frameworks across Asean, the banking sector can support regional businesses in reducing transaction costs and enhancing transparency. Furthermore, collaboration with initiatives like the Asean Single Window or customs clearance can further enhance trade efficiency,“ she told SunBiz.
On wealth management expansion, Amina said Malaysian banks can capitalise on the growth of high-net-worth individuals across Asean by offering unified wealth management services.
She said the region’s progress in cross-border investment vehicles, including wealth management passports such as the Asean Collective Investment Schemes Framework, enables banks to provide more seamless investment opportunities for clients looking to diversify portfolios across borders.
Touching on initiatives to intensify efforts to enhance cross-border payment efficiency, Amina said that, to date, Malaysian banks have established QR payment linkages with Thailand, Indonesia, Singapore, and, most recently, Cambodia.
Under these linkages, she said, payments can be made using mobile banking or e-wallet apps to scan the QR code (quick-response code) at participating merchants in the respective countries.
Malaysia also participated in the Proof-of-Concept for the Bank for International Settlements (BIS) Innovation Hub’s Project Nexus, which aims to connect multiple domestic instant payment systems globally to improve the speed, cost, transparency and access to cross-border payments.
“By fostering collaboration among Asean member countries, Malaysia can help shape a more integrated and competitive financial landscape in the region,“ she said.
To a question on initiatives ABM foresees in strengthening fraud and scam prevention mechanisms across Asean’s financial systems, Amina said fraud and scam prevention have emerged as significant challenges for financial systems amid the expanding digital economy.
“ABM is dedicated to enhancing preventive mechanisms, focusing on both domestic and Asean-wide efforts through active regional collaboration to address these threats and safeguard consumers.”
At the regional level, Amina said, ABM envisages the establishment of a fraud intelligence network across Asean banks to enable real-time sharing of data on fraudulent activities, enhance threat detection, and foster a unified response to cyber risks, in line with the Asean Cybersecurity Cooperation Strategy (2021-2025).
The ABM also emphasises harmonising fraud prevention regulations across Asean to close gaps exploited by cybercriminals and, through collaboration with local regulators and government agencies, seeks to adopt global best practices in cross-border data flows, addressing fraud, preventing money laundering and supporting trade within the Asean region.
“These efforts will enhance trust in the digital financial space, ensuring secure cross-border transactions and protecting consumers across the Asean region,“ she said.
Moving on, Amina said the rise of emerging technologies, such as fintech, coupled with the growing importance of strategic industries like semiconductors and green technologies, presents both opportunities and challenges for Malaysia’s banking sector.
Amina said ABM plays a key role in ensuring that the domestic banking industry stays competitive in these fields within the Asean landscape.
On fintech and digital innovation, she Amina said ABM member banks are fostering collaborative innovation by partnering with fintech companies and promoting cross-border digital banking solutions.
“With Malaysia recently granting digital banking licences, the domestic sector can lead digital payments, remittances, and microfinancing across Asean markets. ABM will work to ensure these innovations align with regional digital economy initiatives, such as the Digital Asean initiative, to enable cross-border digital services.”
On financing strategic industries, Amina said ABM encourages banks to support high-growth sectors such as semiconductors and green technologies through sustainable financing mechanisms.
By aligning with the Asean Green Bond Standards and promoting green financing solutions, Malaysian banks can support businesses driving sustainable development in the region, she added. “Malaysia’s leadership in green sukuk issuance positions the domestic banking sector to offer innovative financial products that align with Asean’s broader sustainability goals.”
ABM will continue to support growth, particularly for small and medium enterprises, promoting social inclusion and amplifying community impact, Amina said.
