Rise Of Fintech, AI Requires Clear, Strong Governance Framework - ADFIM

KUALA LUMPUR, Oct 9 (Bernama) -- The rise of financial technology (fintech) and artificial intelligence (AI) in today’s rapidly changing world presents both opportunities and challenges such as the use of AI in credit scoring that has raised concerns about algorithm bias and the possibility of unfair lending practices.

As such, Malaysia’s Association of Development Finance Institutions (ADFIM) chairman Izwan Zainuddin believes that clear governance frameworks are necessary to ensure responsible innovation in the digital age.

“Initiatives to leverage digital tools for greater transparency, such as the governance in glance system, are critical to navigate the evolving landscape,” he said in his opening remarks at the National Conference on Integrity and Governance 2024, here today. 

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Furthermore, he said that strong governance is critical for establishing trust and confidence in the financial sector, as communities and investors demand transparency and accountability in all proposed projects and programmes. 

“So we must lead by example, setting the highest standard for ourselves and our industry. Recent market fluctuations, from volatility in the global technology sector to concerns about data privacy and cybersecurity, have highlighted the critical need for sound risk management and ethical practices,” he said.

Besides that, Izwan stated that upholding these values is critical as financial institutions and entrepreneurs navigate increasingly complex regulatory landscapes following the introduction of the Malaysian Code on Corporate Governance, which was issued by the Securities Commission (SC) in 2021.

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He said that this improved best practice aligns corporate governance with today’s realities, with a focus on sustainability, board diversity, diversity and investor stewardship. 

“In addition to the mission corporate governance code, SC is also currently seeking public feedback on its draft governance code, especially for the micro, small and medium enterprises (MSMEs) sectors.

“This is an opportunity because MSMEs account is 97.4 per cent of the country's business establishments and they play an important role in our economy, and the next code, which will be launched very soon, will focus on clear accountability and the management of long-term risks tailored to the specific needs and challenges of MSMEs,” he added.

Therefore, by bringing together industry leaders, government officials, and experts, Izwan, who is also Perbadanan Usahawan Nasional Berhad chief executive officer, hopes that the two-day conference will provide an opportunity for collaboration, innovation and set a new benchmark on governance and integrity among development finance institutions and relevant stakeholders.

-- BERNAMA