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The Sun
6 days ago
- Business
- The Sun
Financial service providers increasingly adopting AI: Bank Negara survey
KUALA LUMPUR: Financial service providers in Malaysia are increasingly adopting artificial intelligence (AI), according to the central bank's AI Survey 2024. The survey found that in 2024, 71% of banking institutions and development financial institutions, and 77% of insurance and takaful operators had implemented at least one AI application. 'Notably, in 2024, 71% of banking institutions and DFIs had implemented at least one AI application, an increase from 56% in the previous year. Similarly, 77% of ITOs had adopted at least one AI application, compared to 58% in the previous year,' according to Bank Negara Malaysia's (BNM) discussion paper on 'Artificial Intelligence in the Malaysian Financial Sector' today. BNM said over 60% of banking institutions and insurers view AI as a strategic priority over the next one to three years. 'This trend looks set to continue in the coming years, as over half of the respondens agreed that AI has the potential to generate significant new value for both their organisations and consumers.' The central bank stressed it remains vigilant to developments in AI and closely monitors its usage across financial service providers. 'As AI technologies and the state of adoption in financial service providers continue to grow and evolve, we recognise that AI use may introduce new risks that are not adequately addressed by the existing regulatory framework.' BNM said an escalation in supervisory focus may be considered if AI-related risks become more material, in line with the principles of parity, proportionality, and neutrality. 'For example, due to widespread use of AI applications in critical functions or to replace human decision making. Where relevant, we may explore the need to introduce new regulatory expectations should the need arise in the future,' it said. The central bank said it closely monitors five technological developments and innovation in the financial sector to shape its future regulatory and supervisory approach on AI. The discussion paper seeks to share and obtain feedback on BNM's posture on responsible AI innovation in the financial sector; the proposed regulatory approach for AI, as well as industry guidelines on responsible use; and general development approach including priority areas for greater innovation and industry-led collaboration. BNM said it aims to facilitate and encourage responsible adoption and use of AI across the financial sector in a manner that will advance better consumer outcomes and its broader policy objectives. 'This means that while new innovations, such as AI, are given the opportunity to flourish, associated risks that may negatively impact system-wide stability, consumer outcomes, and confidence in the financial sector will need to be managed effectively.' BNM interviewed select local financial industry players throughout 2024 and issued an updated industry-wide survey to gain insights into recent advancements on AI within the Malaysian financial sector. The AI Survey 2024 received responses from 1,207 financial service providers.
Business Recorder
6 days ago
- Business
- Business Recorder
The State Bank's role in regulating emerging technology
The State Bank of Pakistan, traditionally known as regulator of the country's credit ecosystem and implementer of its monetary policy, has now found itself operating in unchartered waters, beyond its statutory obligations documented in the SBP Act, 1956 and the Banking Companies Ordinance, 1962. With rapid digitalization of the financial sector and increasing adoption of cross-border payment solutions, Pakistanis facing rising concerns with cybersecurity and protection of sensitive consumer data. The country is witnessing an unprecedented technological revolution, whilst being regulated by outdated consumer data protection laws. The State Bank has taken significant steps to encourage adoption of innovative financial technology in Banks and DFIs, whilst ensuring protection of sensitive consumer data through well-structured frameworks. However, the central banks recent initiative to foster innovation in SECP-regulated and non-regulated entities, goes beyond the scope of its frameworks and is grounded by the outdated Payment Systems & Electronic Fund Transfer (PS&EFT) Act, 2007, a statute brought to law before the advent of modern technology such as Generative AI, Cloud Computing and Big Data. With the absence of modern data protection laws,and the rapid adoption of third-party digital solutions in the financial sector, the State Bank is forced to navigate these statutory gaps on its own. In May 2025, the State Bank issued guidelines for inviting applicants to its newly-launched Regulatory Sandbox. The sandbox is a controlled environment where tech innovators can test novel digital solutions using real consumer data, without being suppressed by regulatory red tape. The sandbox is open to 1) SBP regulated entities such as banks and DFIs, 2) Entities licensed by other regulators such as SECP and 3) Non-licensed entities. This initiative hits the jackpot for fintech solution providers, start-up founders and digital innovators, however, being legally backed by the PS&EFT Act, this leads to concerns for protection of sensitive consumer information. With underdeveloped data protection laws, the State Bank is compelled to serve a dual role: upholder of economic stability, as per its statutory obligations, and now as a de-facto technology regulator. In response to this added responsibility SBP released the Enterprise Technology Governance & Risk Management (ETGRM) Framework in 2017. The framework covers areas such as cybersecurity, third party risk and consumer data protection obligations for licensed banks and DFIs. The regulatory sandbox, however, is legally confined by the PS&EFT Act 2007, a federal statute primarily designed to govern electronic transfers and digital payments, with outdated provisions related to consumer data protection. It fails to address data privacy concerns arising from the technology being developed in the modern digital age. The State Bank is now in a position where its own security standards, developed for SBP regulated entities, have surpassed federal legal obligations, in terms of data protection and cybersecurity provisions. In the EU, UK and other developed countries, regulatory sandboxes have played a pivotal role in successfully launching full-scale neobanks, AI-based financing tools and cross border payment systems. The central banks in these developed countries are not expected to work in regulatory silos and are supported by robust legislation, such as the European Union's AI Act 2024, General Data Protection Regulation (GDRP) and the recently enacted Digital Operational Resilience Act (DORA). In Pakistan, policy failure at federal legislative level, has placed the burden of regulating digital innovation in the financial sector entirely on the central bank. In developed countries, a regulatory sandbox serves as a launchpad, an innovation enabler where fintech products undergo detailed scrutiny to de-risk any shortcomings in their business model before full-scale launch in the market. The central banks, with robust consumer protection laws, are then able to focus on innovation rather than regulation. On the surface, the State Bank of Pakistan's decision to enable fintech experimentation under its supervisory guidance seems to be a significant step towards enhancing digitalization and financial inclusion in the country. However, it is evident the regulator ishaving to use the regulatory sandbox to help identify operational grey areas in the emerging tech landscape. With the absence of historical data and regularity clarity – particularly around consumer data protection and fintech – SBPs sandbox, instead of being a proactive driver of innovation, is a learning tool for assessing new technology in a controlled environment, to understand its scope, enabling its governance after full-scale launch. The Asian Development Bank, in its 2025 diagnostic report on Pakistan's Digital Ecosytem, recommends formalization of an inclusive data governance framework, with clearly defined procedures for data security, privacy and data sharing. Policymakers must recognize the importance of a coherent and future-ready regulatory environment to enable timely adoption of emerging technology whilst safeguarding sensitive consumer information through adoption of a comprehensive digital governance and cybersecurity legislation. The future of financial digitalization in the country depends on the proactive formalization and implementation of an all-encompassing legal framework. With the absence of such reforms, the State Banks non-traditional role in enabling fintech reform risks becoming a bottleneck rather than a pathway to a digitalized economy. The article does not necessarily reflect the opinion of Business Recorder or its owners.
CNBC
28-07-2025
- Business
- CNBC
Private investors buy into largest-of-its-kind solar deal to electrify Kenya
Commercial banks have bought into a major $150 million financing deal for off-grid solar power in Kenya, in a sign of growing investor confidence in the electrification of sub-Saharan Africa. Sun King, an off-grid solar energy company, raised the Kenyan-shilling equivalent of $156 million by bundling future payments from its solar-power customers into an asset-backed security that was bought by investors. The deal, arranged by Citi , is one of the largest of its kind and the first to be led by commercial banks. The transaction is expected to enable the sale of about 1.4 million solar home systems to Kenyans, most of whom live in rural areas without access to the electricity grid, according to Sun King. The deal, which pays investors a small premium above the Kenya government's 6-month bond yield, which currently trades at 8.4%, was structured with two tranches. The senior tranche — a relatively safer slice — of the debt was funded by commercial banks, including Absa , Citi, The Co-operative Bank of Kenya, KCB and Stanbic Bank Kenya. Development finance lenders (DFIs), including the British International Investment and the Dutch development bank FMO — which have traditionally been the primary backers of such ventures in the past — bought into a smaller but riskier "mezzanine" tranche, which would be the first to absorb losses if they occur. "This is an example of how to create structures that enable private capital to come in at scale," said Jorge Rubio Nava, Citi's Global head of social finance. This layered structure was critical, providing a safety cushion that made the deal palatable for the commercial lenders. "It's important for [DFIs] to be in the mezzanine, and that's where they can provide a cushion to the senior private capital lenders," Rubio said. The investment arrives amid a challenging macroeconomic backdrop for Kenya. The nation is grappling with persistent budget deficits, with the country paying close to 10% interest on its foreign currency-denominated debt. "The situation may be manageable for now, but without a clear and credible consolidation path backed by external support from the IMF we fear sovereign default will become harder to avoid over time," said David Omojomolo, Africa economist at Capital Economics, in a note to clients on July 3. Skipping a generation About 600 million people in Africa live without grid-connected electricity, according to a 2022 report by the European Investment Bank. The stretched public finances, not just in Kenya but across sub-Saharan Africa, mean state-led investments to grow the electrical grid remain constrained. Sun King and a growing number of off-grid solar companies, like Ignite Energy Access, are leapfrogging the grid entirely by providing households with solar panels and battery storage. A key hurdle for consumers has been the high upfront cost. A "pay-as-you-go" model, used by Sun King and others, aims to make these off-grid systems more accessible. Customers pay a small deposit of about $7 and then make small weekly payments over 12 to 18 months to own the system and pay off the loan. "What makes this work is that we collect small, steady and predictable payments from millions of customers," said Anish Thakkar, co-founder of Sun King. "Then we bundle those payments together and securitize them." The securitized notes are sold to large investors, providing Sun King with the upfront capital it needs to manufacture and distribute more solar systems. The deal builds on a previous $130 million securitization completed in 2023.
IOL News
16-07-2025
- Business
- IOL News
AEF outcomes: Powering South Africa's energy transition
South Africa has the potential to lead Africa's energy transition, says the author. Image: Freepik Last month, Cape Town hosted the Africa Energy Forum (AEF) for the first time in its 27-year history – a significant milestone for South Africa's growing role in shaping the continent's energy future. As the global investment meeting for Africa's power, energy, infrastructure and industrial sectors, AEF brought together heads of state, ministers, policymakers, utilities, development finance institutions (DFIs) and private sector stakeholders. While the forum celebrated just how rapidly South Africa's energy market is maturing, it also highlighted the critical work that is still required to unlock its full potential. The industry's maturity is reflected in the growing number of trading licences being issued, as the sector shifts towards a competitive wholesale trading environment. South Africa's public procurement programme continues to serve as a blueprint for success, underpinned by a transparent and consistent auction process. While technology advancements enable more competitive pricing and improved system reliability, new risk management mechanisms – such as insurance products and credit guarantee vehicles – are enhancing project viability and attracting larger funding volumes. Further progress, however, will depend on the availability of adaptable financial structures. There is a growing need for instruments that can support projects with multiple offtakers or staggered power purchase agreement tenors, while maintaining appropriate risk allocation. DFIs remain essential in this space, not only by providing security packages for senior lenders, but by enabling project preparation in the early stages. Despite growing investor confidence, structural challenges persist. Grid infrastructure remains a core constraint for Independent Power Producers (IPPs). Until this is addressed, it will continue to limit how quickly new projects can be delivered. In the near term, implementing a curtailment framework would allow developers to proceed with projects in grid-constrained areas, with output managed while the necessary transmission infrastructure is rolled out. Permit delays are another concern. Although Environmental Authorisations are guided by a national legislative process, local capacity constraints can result in inconsistent turnaround times, creating significant delays in some jurisdictions. As demand increases, the availability of experienced construction partners will be a key factor in the sector's ability to execute projects at scale. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Nevertheless, the outlook remains positive for South Africa. In the next five years, we'd like to see a vibrant market with a day-ahead trading environment and several IPPs, including Mulilo, managing portfolios of 5 GW or more. We also hope to see an increased number of renewable energy professionals and expanded human resource capacity to support the sector. Continued collaboration between government and the private sector, through platforms such as the Energy Council of South Africa, will be central to achieving this. AEF 2025 confirmed what many in the sector already knew: South Africa has the potential to lead Africa's energy transition. With the right partnerships, policies and investment, the sector can go beyond energy security at home; it can deliver scalable, bankable solutions for the continent. Stuart MacWilliam, Chief Development Officer at Mulilo Image: Supplied Stuart MacWilliam, Chief Development Officer at Mulilo. *** The views expressed here do not necessarily represent those of Independent Media or IOL. BUSINESS REPORT
Business Wire
01-07-2025
- Business
- Business Wire
Pioneering Impact Strategy, Record EM Sustainable Finance (EMSF), Celebrates Its Fourth Anniversary With Strong Outperformance Since Inception
LONDON--(BUSINESS WIRE)--Record Currency Management, in partnership with UBS Wealth Management, is proud to celebrate the fourth anniversary of its pioneering Emerging Market Sustainable Finance (EMSF) Strategy. Operating at the intersection of impact investing, Emerging and Frontier Market currencies and private placements, the strategy offers investors an opportunity to achieve financial returns, alongside measurable impact. Since inception, EMSF has grown to over U$1 billion in AUM and delivered positive returns of +18.7% since inception. The strategy has significantly outperformed both USD and local currency EM Debt benchmarks with around 30% lower volatility - reaffirming that investors need not compromise between financial returns and measurable impact. By taking currency risk across a wide universe of emerging and frontier currencies, EMSF helps MDBs and DFIs raise local currency funding. This allows borrowers in Emerging Markets to receive funding in local currency, eliminating FX risk. Simultaneously, the strategy directly supports the financing of development projects through its investments in bond instruments issued by MDBs and DFIs with active operations in Emerging Markets. 'The need for capital in Emerging and Developing Economies continues to grow as we approach the 2030 deadline for achieving the UN Sustainable Development Goals. It is now estimated by the UN that an additional US$5-7 trillion of annual private sector funding is required to meet the SDGs by 2030. Innovative sustainable finance solutions, such as EMSF, have a vital role to play in bringing private investors into the development finance marketplace. We are proud to have delivered tangible impact and strong outperformance relative to Emerging Market Debt benchmarks, demonstrating that you don't need to sacrifice returns to do good. We remain committed to helping MDBs and DFIs with their local currency operations in Emerging and Frontier Markets.' – Andreas Koester, Head of EM and Frontier Investments. About Record Founded in 1983, Record is a specialist currency and asset manager offering best-in-class bespoke products to large global investors. The Group manages over US$100bn AUM for 140 institutional clients worldwide across FX Risk Management, Absolute Return and Private Markets.
