Kuala Lumpur: The move towards an open finance ecosystem is an inevitable process for Islamic finance, and one which is positive for consumers. This was the consensus view of a panel discussion on “The journey from Open Banking to Embedded Finance” at this year's Global Islamic Finance Forum. The open banking movement gives consumers greater access to financial services through third-party platforms.

The panel was made up of Ajith Jayaram, Chief Transformation Officer, Aeon Credit Service (M) Bhd; Junior Cho, Country Head, Zurich Malaysia; Irfan Khan, Chief Executive Officer of open finance partnership platform, mmob; and Fredes Montes, Senior Financial Specialist at the World Bank, who joined virtually from the Washington D.C.

Ajith said one of the key benefits of open finance is greater inclusion of consumers currently underserved by traditional financial providers.

“Financial inclusion is not about opening bank accounts; it's about giving access to credit in an affordable manner. I believe open banking will solve the problems of financial inclusion. By banks having access to transactional data, we can gather insights on customer behaviour, and assess their financial affordability. In the long run, you get to have a very niche approach to each of your customers.”

Cho described open finance as a “win-win” situation for both customers and financial service providers. “Consumers are offered more choices while companies are able to drive more innovation based on specific consumer demands.”

He added that open finance was a requirement for financial service providers to prosper in the future.

“Customers these days are willing to share their data to get products which are not on the shelf, and more customised to their needs. With that kind of demand, personalisation of services and product offerings becomes paramount. If competitors are not able to deliver on that, we can pretty much see our futures diminish.”

Montes said there are more than 24 million customers worldwide using open finance. “This practice in essence puts consumers at the centre of the decision, so they can access different financial services, of their choice, and not the choice of the banks which are participating in the exchange of information.”

She added the various jurisdictions where open banking is practised had adopted different regulatory frameworks. Within Malaysia, that regulator is Bank Negara. Its Assistant Governor, Aznan bin Abdul Aziz, moderated the panel. He said wider adoption of open banking and open finance would give consumers wider access to financial products and services.

“We are now in the process of developing an open data framework for the Malaysian financial sector.”

Irfan said the move towards open finance is inevitable, and even though the movement started with banking, it now extends far beyond banks. However, he believes there is a future for traditional banks going forward given the ideology within the banking system is changing.

“You might be surprised to hear me say, the banks are going nowhere. What is going to change is that the ideology within the banking system is changing. Traditionally, the thought process was you owned the customer and the customer data. That's fundamentally changed. In the future, the bank is the custodian of the data.”  



The Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) was established in 1995. Currently, AIBIM has 28 member banks and the association:

  1. Promotes sound Islamic banking system and practices in Malaysia.
  2. Represents the interest of members locally and abroad.
  3. Provides advice and assistance to members pertinent to the development of Islamic banking and finance at a local, regional, and global level.
  4. Coordinates human capital development initiatives.
  5. Promotes public awareness on Islamic Finance.

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