Bank Negara Malaysia (BNM) has published a discussion paper outlining a proposed regulatory framework for the use of artificial intelligence (AI) in the country’s financial sector. The announcement was made during MyFintech Week 2025 and marks a significant step toward modernising how Malaysians engage with banks, insurers, and investment platforms.

This framework will guide the responsible use of AI in financial services, with a focus on protecting consumers and promoting public trust. BNM is now seeking public feedback on the discussion paper, which is open for submissions until 17 October 2025.

A New Rulebook for Financial AI

According to BNM Governor Datuk Seri Abdul Rasheed Ghaffour, the central bank supports innovation that brings real economic value. However, he stressed the need for safeguards to manage risks and uphold public confidence.

The discussion paper outlines BNM’s expectations for how AI should be adopted across banking, insurance, and capital markets. It also proposes rules to ensure that AI systems are transparent, fair, and explainable especially when used to assess credit, detect fraud, or recommend financial products.

BNM is inviting written feedback from industry players, academics, and members of the public. Submissions should include relevant evidence, rationale, or examples, and must be sent via email to [email protected].

Why Is Regulation Necessary?

As financial institutions increasingly use AI to make decisions, it is important to ensure the technology is applied responsibly. Without proper regulation, AI could lead to several unintended consequences that affect consumers directly.

One major concern is algorithmic bias, where certain individuals or groups may be treated unfairly by automated systems. For example, a credit scoring model could unintentionally favour applicants from certain demographics while disadvantaging others who may be just as creditworthy.

Another issue is the lack of transparency. Consumers may not understand why their loan or insurance application was rejected, especially if the decision was made by an AI system without clear explanation or recourse.

There is also the risk of data misuse. AI systems often rely on vast amounts of personal data to function effectively. Without strict guidelines on data governance, consumers’ private information could be shared with third parties without clear consent or control.

The proposed framework aims to address these risks by ensuring that AI is implemented with fairness, transparency, and accountability at its core.

How This Could Affect Your Finances

BNM’s new framework could influence several aspects of your financial life.

If you are applying for a loan, AI may be used to assess your creditworthiness by analysing a broader set of data. This could benefit freelancers, gig workers, or others with non-traditional income sources. The framework ensures that this process remains fair and that you have the right to understand how decisions are made.

Investment tools may also change. Robo-advisors and AI-driven platforms could offer more personalised, lower-cost investment strategies. The framework will require these services to be transparent about risks and fees.

You may also see more tailored products. AI can enable banks and insurers to offer solutions based on your financial habits or lifestyle, such as usage-based insurance or savings plans that adapt to your spending patterns.

What’s Next: Open Finance and Tokenisation

BNM also announced that it will release two more policy papers by the end of 2025: an exposure draft on open finance, and a discussion paper on asset tokenisation.

Open finance will focus on creating a secure, consent-based model for sharing banking data through open APIs. This could lead to more seamless personal finance tools and better customer experiences.

The tokenisation paper will explore how digital tokens can represent assets or data securely and efficiently. It will outline key risks and propose safeguards for safe implementation in financial markets.

For more insights on managing your money and making smarter financial decisions, you can find a wealth of information on personal finance and savings tips on the RinggitPlus blog.

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• TAGS:
• Artificial Intelligence
• Bank Negara Malaysia
• BNM
• Datuk Seri Abdul Rasheed Ghaffour
• MyFintech Week