Bismillahirrahmanirrahim.

Chairmen of Labuan IBFC Associations, 

Distinguished speakers and participants, 

Datuk-Datuk, Ladies and Gentlemen.

Assalamualaikum Warahmatullahi Wabarakatuh and a very good afternoon to everyone here today. 

1) Firstly, on behalf of Labuan Financial Services Authority (Labuan FSA) I would like to extend a very warm welcome to all of you to the Labuan International Finance Lecture Series 2017. This is one of the key annual events for the Labuan International Business and Financial Center (Labuan IBFC) and I would like to congratulate the organizing committee for their effort in organizing this event with the theme “The 4th Industrial Revolution: Fintech, Enabling The Future of Financial Services“.

2) Allow me to take this moment to welcome our distinguished guest-speakers and panellists for today –

• Mr. Steve Tunstall, Chief Executive Officer and Co-founder of Inzsure; 
  
• Mr Mark Smalley, Co-Founder and Chief Executive Officer of Neuroware; 
  
• Mr. Ruben Tan, Chief Technology Officer, Neuroware;  
  

and the moderator for the session, Encik Mohammad Ridzuan Abdul Aziz, Co-Founder and Chief Executive Officer of RHT Compliance Solutions. 

3) Thank you for being with us here in Labuan to share your knowledge and experience on a topic that has captured vast public interest, more specifically on the subject matter of Financial Technology or FinTech as it is widely known. It is timely that we address this subject matter in view of the unprecedented technological development the world is facing and how innovation in technology is reshaping the globally competitive financial sector.

Ladies and gentlemen,

4) As we are aware, technology has evolved into one of the most important platforms for innovation, competitiveness and growth in just about every facet of our lives. The evolution and endurance of computer technology as a key platform in financial services has been significant particularly since the new millennium. Just recently in June 2017, the ATM celebrated its first 50 years as a banking platform, while online banking and brokerage had its origins in the 1980’s. More recently are the arrival of mobile technology, the ubiquity of the internet, development of cryptography as well as blockchain over the past decade. These technological advancements are fast reshaping every aspect of our society including the way we live, communicate, work and do business. Some of the best examples of how technological revolution has impacted our lives are seen through the growth of e-commerce platforms such as Amazon.com, Alibaba and AirBnB among many. Even crowdfunding platform which was introduced over a decade ago, now has seen a proliferation of alternative market-based funding platforms intended to serve the younger generation and new businesses. Today, we can pitch an idea onto a crowdsourcing site or source for a loan from a peer-to-peer lending platform without the need to go through the banking system.

5) Another key innovation under FinTech is the use of digital payments which has been boosted by advancements in digital identification and biometrics. The trend in the use of digital wallets and cryptocurrencies as a form of decentralised payment system is becoming increasingly popular. High acceptance of cryptocurrencies has given birth to “Initial Coin Offerings (ICO)” - which are similar to initial public offering (IPO), but are used to raise funds for start-ups using blockchain technology. In 2016, over USD270 million were raised from companies in various industries via ICO. (reported by Smith+Crown, a crypto-financial news and research firm).  

6) As the global business and financial environment becomes increasingly digitized and interconnected, the adoption of digital technologies in business models becomes essential to enable companies to maximise greater scale, enhance effectiveness and efficiency as well as penetrate new markets more swiftly. As such, in order to remain relevant and competitive, it is vital that technological advancements should be holistically embraced.

Ladies and gentlemen,

7) The growth of FinTech is inevitably moving business and financial services towards an environment which is more transparent, informative, better connected and increasingly empowered. Nevertheless, the speed and complexity in the development of FinTech also comes with adverse tail-risks that could lead to undesired consequences. Several events in recent years have exposed the vulnerabilities in cryptocurrency transactions which had resulted in theft of substantial amounts of bitcoins. In this regard, the challenge for policymakers and regulators is to ensure the development of FinTech creates a better opportunity for business growth while minimizing risk to investors and the society. Many countries are now adopting cautionary approach towards ICO and cryptocurrency, while some countries like China and Korea have imposed conditional bans on ICOs. In Malaysia, the Central Bank is looking into ways to regulate cryptocurrencies and would be issuing a policy soon.

8) As more and more businesses adopt digital technology, cybersecurity risk becomes another major concern. Business are faced with cyber threats such as hacking, virus attacks, identity theft and malicious software that threatens to disrupt the business and financial transactions in various ways including denial of service. As cybersecurity risk proliferates, businesses must ensure they have the right infrastructure and governance structure in place to prevent, detect and recover in the event of cyberattacks.

9) Undoubtedly, technology-driven change is inevitable and this is a global phenomenon but the final balance will also depend on, among other factors, how the authorities and regulators foster a regulatory environment that facilitates innovation, without compromising protection for investors and consumers.  

Ladies and Gentlemen,

10) Before I conclude this address allow me emphasize two key points. First, FinTech is an unavoidable disruption force that is changing the way businesses are being conducted. Second, among the key factors in unlocking the full potential of FinTech are how to harness the technology and maximise customer satisfaction as well as meeting of needs within the parameters of investor-protection and regulatory prudency. Today, we will have a great opportunity to learn from experts regarding the opportunities and challenges of FinTech, and I am sure we will benefit from the interesting discussion on this exciting topic.  

11) Once again thank you for your presence here and I wish all of you an informative session as well as a lively and fruitful discussion later on.  

Thank you very much.