FAQ

FAQ2019-10-17T17:16:18+00:00

Early Stages: Thinking about getting on the Sandbox?

The Financial Technology Regulatory Sandbox Framework (Sandbox) is introduced to enable innovation of fintech to be deployed and tested in a live environment, within specified parameters and timeframes.

A sandbox cannot be used to circumvent existing laws and regulations. A sandbox is therefore not suitable for proposed product, service or solution that is already appropriately addressed under prevailing laws and regulations.

Prior to sending in an application, please do assess the following criteria.

  1. First and foremost, does your solution fall under the regulated activity of Bank Negara Malaysia?
    • If the business falls under a regulated activity of BNM (refer to Appendix 1), is the product, service or solution must be either wholly or partly incompatible with laws, regulations or standards administered by the Bank?
      • Are there any regulatory impediment that prevent the solution from being deployed? Or, can the solution be operating without prior approval under the current regulations?
  1. Have you conducted a proof of concept?
    • Have you conducted adequate assessment to demonstrate the usefulness and functionality of the product, service or solution and identified the associated risks?
    • The solution should at least be in the stage of the development that is ready for intended audience to try the solution
  1. Is the product, service or solution genuinely innovative with clear potential?
    • BNM deems a product/ service/ solution to be innovative if is not already available in the Malaysian market. This will be evaluated with using the value proposition that the product, service or solution may bring to financial services industry. Among others, the solution:
    • Addresses certain problems faced by the industry/ customers/ FIs
    • Enables financing to new market segments e.g. start-ups/ micro SMEs
    • Automates certain processes within the FIs to improve turn-around-time
    • Provides new or more convenient ways of getting financing
    • Improves loan underwriting process i.e. shorter TAT, improve loan performance
    • Improves customers’ experience

The Sandbox is open to all fintech companies including those without any presence in Malaysia. However, fintech companies with potential to contribute to the creation of high value-added jobs in Malaysia will be viewed more favourably by BNM.

While there is no limit to the number of participants in Regulatory Sandbox, BNM will consider the number of participants that can be effectively supported in terms of providing guidance and oversight during the testing period.

The Sandbox is also open to stand-alone fintech companies. However, fintech companies that collaborate with FIs could gain added advantages from guidance and support provided by the FI with respect to regulatory requirements and risk mitigations in applying to participate in the Sandbox.

FTEG can be contacted via email, fintech@bnm.gov.my

Pre-application: What do you need to get started?

You will:

  • Ensure to do your checks to ensure applicability prior to submission of application.
  • Be open, honest and co-operate with us.
  • Provide all information that you think we should be aware of.
  • Ensure key individuals at your firm who will drive the proposition forward are involved throughout the process.

We will:

  • Aim to provide feedback / engage with you if you have any further questions.
  • Be open, honest and give clear feedback on your proposals.
  • Not provide a consultancy service. You should engage others if you need this.
  • Be involved in the application process and will ensure it is as seamless as possible.

The Bank will inform an applicant of its eligibility to participate in sandbox within 15 working days* of receiving a complete application. The pace at which you progress through your pre-application stage is largely up to you.

*Subject to receiving a complete set of information that best allows us to assess your application.

Your application should cover the following points:

  • Description of the product, service or solution
  • How is the solution genuinely innovative
  • How the usefulness and functionality of the solution has been assessed and/or tested
  • Evidence of resources available to support testing in the Sandbox
  • Business plan for the solution to be offered on wider commercial scale
  • Legal or regulatory requirements that are incompatible with the solution and the regulatory flexibilities needed to undertake the test
  • Identify risks associated with the testing
  • Identify appropriate risk mitigation measures/safeguards
  • Intended key outcomes of the testing
  • Expected duration of the test
  • Location of the IT Infrastructure
  • Source of funding for the testing
  • Collaboration between financial institution and fintech company, if any

Application: What happens when you apply to the Sandbox?

You can either submit an online application by filling up the online application on www.myfteg.com or you can download the application form on www.myfteg.com and email it to fintech@bnm.gov.my

Before you submit your application, you should review it to check you have provided adequate responses to all questions and enclosed any supporting documents. It is important to always be open and honest with us as the success of your application will be affected if we find you have deliberately withheld information or provided false or incomplete facts.

Once we receive your complete application, we will review the following information as part of our assessment:

  • Are you eligible to participate in the Sandbox?
  • What is your value proposition?
  • Do you already have a proof of concept?
  • Who are the key parties and stakeholders involved?
  • What are your sources of funding?
  • Do you have significant resources to participate in live testing?

When an application is not approved, we will send an email detailing reasons for the rejection. You can reach out to us if you need any further clarification on our response.

Yes, all information submitted to BNM for the purpose of the Regulatory Sandbox will be treated confidentially.

While there is no limit to the number of participants in Regulatory Sandbox, BNM will consider the number of participants that can be effectively supported in terms of providing guidance and oversight during the testing period.

Testing: How can you build out your FinTech solution with confidence?

If we decide to approve your application, we will engage you on steps for the testing phase:

  • Testing parameters such as the scope and duration of the test, regulatory flexibilities requested and frequency of reporting;
  • Specific measures to determine the success or failure of the test at the end of the testing period;
  • An exit strategy should the test fail or be discontinued; and
  • A transition plan for the deployment of the product, service or solution on a commercial scale upon successful testing and exit from the sandbox.

The testing period shall not exceed 12 months from the start date of the test.

To extend the testing period, a written application must be submitted by the participants to the Bank no later than 30 calendar days before the expiry of the testing period. The application should state the additional time required and clearly explain reasons for requiring the extension.

Depending on the reason of failure, the Bank may prohibit deployment of the product/ service/ solution in the market.

Fintech companies with successful testing will be assessed based on applicable licensing, approval and registration criteria under the FSA, IFSA and MBSA, where applicable.

General

You can visit BNM’s website for a comprehensive list of regulated activities:

BNM’s guidelines are generally based on the activity or business carried out by entities regulated by the BNM. However, BNM has issued Fintech Regulatory Sandbox Framework to allow fintech companies to experiment with innovative solutions in a live environment, within specified parameters and timeframes.

You may write in to BNM at fintech@bnm.gov.my with details of your fintech solutions and how it will be applied in a specific use case. BNM will advise you on whether prior approval by BNM is required for you to offer your fintech solution.

No, BNM does not regulate these entities as they are registered market operators which are regulated by the Securities Commission.

Cryptocurrency is not recognised as a legal tender in Malaysia and BNM does not regulate the operations of Bitcoin. The public is therefore advised to be cautious of the risks associated with the usage of such digital currency.