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WorksheetsChapter 8 & 9 Implications of Payment Systems
Total questions: 16
Worksheet time: 13mins
The three reasons why banks are reluctant to adopt RTPS to assist their customers in the payment process...
High implementation cost and support cost
Unclear revenue potential
Project implementation Risk
Card is expensive
What could be the reason why banks in developed markets are more reluctant to adopt RTPS than banks in emerging markets?
Implementation costs to change the existing systems in developed markets are heftier than the emerging market
Retail payment systems in developed markets are established and matured for many years compared to emerging market
Banks in the developed markets are more sceptical on the new RTPS as they are complacent to the existing payment systems that have been working so well for so long
Banks in the developed markets have more motivation to make changes than the emerging markets
Banks in the emerging markets are more willing to change as they do not have an established payment systems and so not having huge sunk cost
Despite the banks in emerging markets may be willing to adopt RTPS more easily than the ones in developed markets, what are the factors that may hold the banks back from implementing RTPS in the emerging markets?
if the payment infrastructure is underdeveloped in the market, huge implementation costs can be a large leap, especially for smaller banks in the country
the ability to reach the large pool of unbanked population with improved banking services after the implementation of RTPS may not be effective due to the lack of immediate budget available
lack of participating banks together to implement RTPS to benefit the market
Huge maintenance cost - support and enhancement to the RTPS
What is the most concerning factor should the banks implement RTPS in its payment systems for retail consumers?
ROI
profitable revenue Stream
RFID
Reduced card revenue
Loss of float revenue
What is an API and how does it help banks to stay competitive in the financial market today?
API is a set of tools that enable different software components or systems to effectively communicate with one another
FinTech firms provide technology support to the banks needed in key areas such as the simplifying process of adding innovative technology services by piecing together building blocks of flexible services
FinTech firms had direct competition with the banks as the banks will refuse to collaborate, thus the banks developed their own sets of technology using API
Despite the banks and FinTech firms seeming to have joined forces to stay relevant in the digitalization of the financial markets, the banks today were still not built to serve today's fast-paced and digitally-savvy customers. Why?
The banking products developments and their delivery are very much rigid
Banking business models and technology infrastructure are constructed around the products available, not how they serve the different customer segments
Banks are willing to adapt to the fast-changing environment
Hostile behaviour of some banks to argue that FinTech disruption has nothing to do with the banks
Banks and non-bank institutions in Malaysia have seen to work together in embracing the FinTech evolution in the financial market.
Malaysians are using many alternative payments channel together
Malaysians adopted mobile banking alongside with e-wallets provided by non-bank institutions in mobile payments
Malaysians know how to alternatively use specific payment channels at a time for varying purposes
Malaysians are concentrating only one payment channel to see how the banks can compete with the non-bank institutions
Risk of the negative public opinion that results in a critical loss of funding or customer base.
Operational risk
Security risk
Reputational risk
Legal risk
Risk of losing control over access to the systems and vulnerability of the systems to external or internal cyberattacks
Operational risk
Security risk
Reputational risk
Legal risk
Risk of loss due to deficiencies in system design and/or implementation which lead to reliability or integrity issues. Also, the risk of customer misusage and lack of understanding on the security system.
Operational risk
Security risk
Reputational risk
Legal risk
Risk of violating or non-conformance with laws, rules, regulations or where the legal rights and obligations of parties to a transaction are not well established.
Operational risk
Security risk
Reputational risk
Legal risk
In theory, how would e-payment affect the monetary policy of a country?
E-money eliminates the use of conventional bank money/notes. Cash and deposits will disappear.
The use of e-money complicates the operating process to set money market interest rates
Reduce the central bank asset holdings and interested earned on these assets that constitutes its seigniorage revenue
Central banks no longer need to control the monetary supply with interest rate
e-money would be disappeared and cash will be used again
In Malaysia, is there such an impact of the use of e-money affecting the monetary policy?
Yes. Cash is replaced rapidly and is no longer relevant in the market.
Yes. e-money is affecting the monetary policy and how frequent the central bank changes interest rates
No. e-money is still at the development stage and does not affect the operation of monetary policy, yet. Cash remains relevant in Malaysia.
How does BNM play its role to promote e-payment in Malaysia?
BNM is to grant approval for the verified payment system operators and the issuers of the DPI
on-site examinations and monitors activities of major payment operators and DPI issuers
off-site monitoring to address gaps needed to be rectified
facilitator in coordinating industry
How will cross-border e-payment pose a legal issue to the service providers?
Different legal and regulatory requirements when dealing with customers abroad
Jurisdictional ambiguities with the responsibilities of different national authorities
Operational risk when dealing with foreign-based service providers
Pricing mechanisms in other countries are different
What are the factors determining the scale of illegal money laundering activities that may be conducted in e-payment transactions?
e-money balances that can be transferred without interaction with the system operator
the maximum amount that can be held on an e-money device
the maximum record-keeping capacity in the payment system
the ease with which e-money can be moved across borders
