Interview With Fusang Board Advisor: Mohammad Ridzuan Abdul Aziz
What do you think has been the impact of blockchain technology on the financial services industry thus far?
Globally, it has created a credible future foundational technology that could address key issue statements yet to be solved by the incumbent financial service institutions.
Blockchain technology has enabled new entities such as Fusang to offer an effective improved technology base that would comprehensively address key issues such as democratizing access to financial services which in turn would address inclusivity, better efficiency for processes and reduction or even elimination of unnecessary intermediation.
The blockchain technology is still at an infant stage i.e. with tremendous potential for its development at enterprise, industry, infrastructure and eco-system levels.
What are the opportunities for the financial services sector to embark on blockchain technology? What is or will be the biggest game changer?
Some of the key issues beleaguering the financial services sector could be solved by the blockchain technology. As a foundational technology, many services could be laid upon it for personalized and customized product/services to be established and delivered with better effectiveness. For instance, Smart Contracts could be deployed for bite-size, pay-per-use and need-base products and services.
Another innovation from blockchain is using decentralization as the main theme for distribution of values to key stakeholders. The issue centralization has been the main cause for many inefficiencies resulting in cost escalation,mispricing, as well as the reluctance to serve certain segments in the society by the incumbent financial services institutions. Blockchain would be able to open up these segments of potential users, due to its inherent efficiencies in distribution.
The blockchain technology would also enable fractionalization of asset, including underlying assets, shares/stock and investment instruments such as bond and sukuk. This would facilitate various assets to be optimized for better leverage andvalue-enhancement for financial institutions to offer personalized services and products.
At the same time, what do you think would be the biggest challenge for the financial services sector in adopting blockchain technology?
Firstly, the lack of knowledge and relevant perspective is the main challenge for an effective customer-level deployment, enterprise level implementation and infrastructure establishment, as well as eco-system development. One of the key impacts is the slow mindset shift at all levels, especially at the decision-making levels for various stakeholders.
Secondly, the incumbents will be the slowest to adopt blockchain technology due to legacy concerns such as talent re-skilling, disruption to current business model, uncertainty on return on investment, and lack of infrastructure to facilitate viable scalability that could be sustainable.
Thirdly, there is a general misconception that the deployment of various technology (this includes blockchain) would inevitably result in redundancy for human employees. This paradigm shift amongst potential users, especially in incumbent entities is required in order to see full scale adoption of this technology. But I expect effective and demonstration use cases will slowly but surely change this mindset, in fact we are already seeing mainstream adoption compared to even 5years ago.
How do you think blockchain technology and digital finance will evolve, either organically or as a need to meet the requirements of legacy regulatory requirements?
As fintech paved its way by changing various financial services business models, blockchain would facilitate the following –
1. Embed financial services within other eco-systems
2. Bite-size livelihood solutions that’s highly personalized and customized
3. Self-regulatory decentralized eco-system and infrastructure
Organically, micro services such as pay-per-use type smart contracts could be developed for it to be deployed as part of the tokenization and fractionalization solutions.These combined solutions would best be deployed as a part of a larger ecosystem such as a digital bank, large insurance entity or even sovereign wealth institutions.
Developing bite-size financial services would be the likely future strategy for growth and scalability of financial services as the demand for data-driven and personalized financial services are rapidly growing among the younger generation. Combining an embedded feature within a service offering coupled with a highly personalized approach is inevitable and is the way forward for the future of financial services.
What role do you envision Fusang playing in this digital blockchain based ecosystem?
Two key roles that Fusang could significantly be involved with –
1. Optimizing listed corporate liquidity by facilitating tokenization and fractionalization of its listed and unlisted shares, and
2. Deployment of smart contracts to facilitate communal and commercial use cases
For the first item, Fusang with its existing license as a digital asset exchange (DAX) fromLabuan Financial Services Authority (Labuan FSA) is in a position to enhance any listed corporate entity in the ASEAN region for each of them to improve their listed share liquidity via tokenizing and listing it on Fusang’s DAX. This move would optimize the listed corporate shares liquidity as Fusang would be able to offer their shares globally, in addition to the initial listing.
As for the second item, various assets could be tokenized and fractionalized for it to be optimized from a use case and a potential monetization approach. For instance, many investment management schemes and funds could deploy this innovation forit to be able to offer their products at lower price and the ability to be embedded with other financial eco-systems for an enhanced value-added offering.
Fusang has already established the needed technology for the above innovations to be deployed and embedded at various levels and needs.
About Mohammad Ridzuan Abdul Aziz
Mohammad Ridzuan Abdul Aziz (Ridzuan)has over 20 years of commercially driven regulatory, compliance and technology experiences in Asia-Pacific. He is currently theMalaysia Country Director and Head of ASEAN Business for WorldRemit, and on the board of KAF Investment Bank, AKRU robo-advisory, DearTime InsureTech and Ethis Global Ventures.
He is a member of the board advisor for the Fintech Association of Malaysia where among others, he focuses on raising Malaysia’s unique combined values of a mature onshore fintech eco-system, leveraging on the nimble Labuan International Business andFinancial Centre’s digital framework as well as a wealth of depth & breath of the country’s Islamic Digital Economy. He is also the Secretary General for theASEAN Chapter of the Global Impact Fintech Forum, a global think tank that focuses on Fintech initiatives that offers significant impact within its members from across 70+ countries.
Ridzuan is also advising the LabuanFinancial Services Authority (Labuan FSA), Asia Pacific University (APU),Taylor’s University Business School, Quest International University (QIU) andPolicy Street.
In 2013 and 2016, Ridzuan founded regulatory technology advisory firms - RHT Compliance Solutions and CS TechnologySolutions Sdn Bhd, respectively. In 2017, Ridzuan was the CEO of Sedania As-Salam Capital Sdn Bhd, a digital-enabling platform for Shariah-compliance personal objective-loan financing.
He was a regulator with the KualaLumpur Stock Exchange (1998) during the Asia financial crisis, the SecuritiesCommission ((2001) and then redeployed to a joint task force between theSecurities Commission and Bank Negara Malaysia during the formation of the investment bank concept (2002).
Ridzuan graduated from University ofWales, Aberyswyth (1997) with BSc Economics, majoring in Accounting andFinance. He obtained his MBA, specializing in Management Information System from the International IslamicUniversity Malaysia (2005).