Bank Negara Malaysia (BNM) has called on financial institutions to elevate artificial intelligence (AI) from a technology initiative to a boardroom priority, warning that governance, accountability and public trust will determine whether the technology delivers lasting value to the financial system.
Speaking at the inaugural AICB Nexus 2026 conference, Bank Negara Malaysia Governor Datuk Seri Abdul Rasheed Ghaffour said AI is rapidly transforming financial services, with more than 70% of Malaysian financial service providers already implementing at least one AI application.
While AI adoption has accelerated across the industry, Abdul Rasheed stressed that the bigger challenge is ensuring the technology strengthens trust, preserves accountability and reinforces confidence in the financial system.
“AI may transform finance. But trust will determine whether that transformation endures,” he said, underscoring the central bank’s guiding principle that “innovation without trust is not progress”.
AI Moves Into the Boardroom
Abdul Rasheed said AI should no longer be viewed solely as a technology project managed by IT teams, but as a strategic business issue requiring active oversight from boards and senior management.
“As AI becomes more deeply embedded in financial services, accountability must remain with those entrusted to govern and lead. Responsibility cannot be delegated to an algorithm,” he said.
He noted that AI deployment should be anchored in clear business outcomes, measurable value creation and a defined risk appetite, making governance and capital allocation central considerations for financial institutions.
Abdul Rasheed said increasingly sophisticated AI models are raising new governance challenges as they become harder to explain, validate and scrutinise despite offering stronger analytical capabilities.
This, he said, requires financial institutions to address critical questions over accountability, fairness and oversight as AI systems continue to evolve beyond traditional control frameworks.
From Efficiency to Industry Collaboration
While AI has largely been deployed to improve productivity, compliance, fraud detection, credit assessments and risk management, Abdul Rasheed said the next phase of innovation should extend beyond internal efficiency gains.
Instead, he urged financial institutions to harness AI collectively to tackle industry-wide challenges such as financial scams, fraud and cyber threats.
He pointed to the collaboration between BNM, the Royal Malaysia Police, financial institutions, PayNet and other ecosystem partners to strengthen customer protection through intelligence sharing and coordinated safeguards.
“Trust is not built by one institution, but by an ecosystem working as one,” he said, adding that institutions should continue competing where markets demand it while collaborating where public interest requires collective action.
Risk, Compliance Roles Become More Critical
Abdul Rasheed also highlighted the growing importance of risk management, compliance and internal audit functions as AI systems become increasingly autonomous and complex.
He said assurance can no longer be limited to verifying whether controls exist. Instead, institutions must be capable of explaining AI-driven outcomes, challenging automated decisions and retaining clear accountability over increasingly opaque systems.
He described these as leadership challenges rather than purely technical issues, requiring stronger professional judgement as AI assumes a larger role in decision-making.
Beyond governance, Abdul Rasheed said the financial industry’s long-term success with AI will depend on its investment in people.
He noted that the future of AI will be shaped less by technology itself than by talent equipped with governance capabilities, ethical judgement and the ability to operate effectively alongside intelligent machines.
As AI reshapes job roles and workflows, financial institutions must prioritise upskilling and reskilling their workforce to ensure employees can adapt to the changing landscape.
He also commended the Asian Institute of Chartered Bankers’ Future Skills Framework for helping develop AI literacy, governance capabilities and ethical competencies across the industry.
Supporting Innovation While Safeguarding Trust
Abdul Rasheed said BNM’s regulatory approach remains focused on encouraging innovation while ensuring it progresses responsibly.
The central bank, he said, will continue engaging with the industry early, providing clearer regulatory expectations, supporting responsible experimentation and investing in shared digital infrastructure that enables innovation at scale.
He highlighted the forthcoming Open Finance framework, which will enable secure, consent-based data sharing with phased implementation beginning in 2027, alongside ongoing asset tokenisation pilots under the Digital Assets Innovation Hub.
These initiatives, together with the upcoming Financial Sector Blueprint 2027-2030, are intended to strengthen the resilience and competitiveness of Malaysia’s financial sector while ensuring technological advances continue to serve the broader economy.
“The future of finance will not be defined by how fast and sophisticated our technology is,” Abdul Rasheed said. “It will be defined by whether that technology strengthens trust, broadens opportunity and serves society well.”
