Of importance, Islamic financial institutions must be open to rethinking their traditional business models and approach to doing business. In particular, the openness to forge digital partnerships and strategic alliances has the potential for the co-creation of innovative solutions. Globally, 82% of incumbents are expected to increase fintech partnerships in the next three to five years. 2/3  BIS central bankers' speeches  Collaboration with the fintech community should therefore become the norm. For example, collaboration with crowdfunding and peer-to-peer financing startups can be a win-win growth opportunity. Through such partnerships, banks would be better able to service smaller businesses by referring potential borrowers not meeting their targeted credit profiles to these lending platforms. In return, these platforms can refer its borrowers that have gained scale to the banks for larger financing. Bank Negara Malaysia is supportive of the growth of fintech, including Islamic fintech. At the same time, as a regulatory body with a mandate for financial stability, we need to ensure that risks to the financial system and customers arising from innovations are properly managed. This is why we have developed the Regulatory Sandbox which allows new fintech solutions to be introduced in a live and controlled environment. It provides a “safe” environment where any risks and failures can be better managed. The time to market for new innovative products can also be reduced, which would otherwise be a hurdle under the traditional regulatory process. Its flexibility is also expected to better improve accessibility, affordability and attractiveness of financial products and services.
The second part of my status report therefore concerns where we stand in the crisis cycle with regard to the financial system, how the socalled unconventional measures we have taken appear to have worked and how we look upon them in the future. But, before we go on to this – let me give you a brief summary of the “extraordinary” or “unconventional” measures taken as a result of the financial crisis and its effects. “Extraordinary” or “unconventional” measures… When the international financial turmoil escalated into a worldwide crisis in September last year, many countries found it necessary to dig much deeper than usual into the economic policy toolbox to find partly new methods and tools. Governments, central banks and other authorities around the world have taken extensive measures to recreate confidence in the financial markets, to maintain financial stability and to counteract the negative effects of the crisis on economic activity. The central banks’ measures, such as lending to the banks, are reflected in the fact that their balance sheets have increased substantially during the crisis, as can be seen in Figure 7. 6  BIS Review 138/2009  Figure 7.