FinTech Regulation is a Double-edged Sword
Various countries around the world are taking a closer look at their financial regulatory guidelines to see how they can be adjusted to accommodate the FinTech revolution. No one wants to be left out of the race to become a market leader in financial technology, yet the majority of regulations do not require much innovation in this sector. Financial innovation is bound by specific guidelines and rules, most of which were created several decades ago. As one would come to expect, these rules have not been adapted to suit more modern needs, and legislation is moving slowly towards new solutions. Luckily, some governments are open-minded when it comes to FinTech, and take matters into their own hands. The governor of Bank Negara Malaysia mentioned the great benefits in bringing FinTech to Islamic finance. At the same time, Muhammad Ibrahim made a note of how regulators need to guard against certain risks present in the FinTech sector. Any form of innovation — particularly in the financial sector — is always greeted with a fair amount of skepticism, before it is either embraced or rejected altogether. Very few people keep tabs on Islamic finance, despite the recent launch of the online sharia-compliant Investment Account Platform. Moreover, this investment platform is set up by six Malaysian banks, and backed by the local government. Its primary purpose is to serve as a central marketplace for financing smaller businesses.