Tech Regulations & Govt | |
Tech Regulations & Govt | |
4415 VIEWS | |
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Friday, May 17, 2019
/ 09:06AM / By Natasha Odendal, Creamer Media Snr Deputy Editor
c/o @fintechngr / Header Image Credit: BizNis Africa
South
Africa’s complex financial technology (fintech) domain is in flux and morphing
into never-seen-before services across every aspect of the financial sector,
with regulators and policymakers working on a coordinated approach to
policymaking that will leverage fintech innovation in a way that meets the
needs of the local market.
A report by
the Intergovernmental FinTech Working Group (IFWG) shows that the infusion of
technology within financial services presents significant potential benefits,
including improving financial inclusion and enhancing the value of financial
services provided to society.
The report
is a result of the inaugural market outreach workshop held in April to identify
key considerations in developing a harmonised approach to fintech-driven
innovations for the benefit of all South Africans.
The fintech
phenomenon has the potential to reshape the financial services industry by
removing market inefficiencies and delivering novel solutions by exploiting
emerging exponential technologies, such as application programming interfaces,
big data, blockchain and cloud computing.
“Improving
overall social welfare may be one of fintech’s greatest promises; however, it
can also pose risks to consumer protection and overall stability,” the report
noted.
The
inaugural workshop provided a platform to identify the risks and benefits
involved in financial services innovation driven by technology, the regulatory
challenges faced by fintech companies in South Africa and input on the response
that regulators in the country should take to develop appropriate policies and
to implement effective regulatory frameworks for this emerging industry.
The
Financial Intelligence Centre, Financial Sector Conduct Authority, the South
African Reserve Bank and the National Treasury are collaborating to ensure that
fintech’s potential can be fully leveraged and to develop a common
understanding among regulators and policymakers of fintech developments and the
relevant policy and regulatory implications for the South African financial
sector and economy.
However,
while it is believed that innovation in financial services is “best left to
market forces and competitive dynamics”, the authorities are “fully aware” that
regulation needs to keep pace with innovation, owing to potential risks.
“Regulators
shoulder the responsibility to assess and manage these risks. Intermediation
risks include consumer protection concerns, money-laundering considerations and
general business risks, which include more macro-level financial stability
risks.
“Greater
interconnectedness through growing . . . alternate financial services platforms
may have an impact on financial stability. Such platforms may grow quickly and
may become too-large-to-ignore,” the IFWG said.
Private
cryptocurrencies and initial coin offerings, financial inclusion and innovation
facilitators are the three main topics of focus.
The workshop
was an important step towards achieving the objective of regulator and private
sector engagement and collaboration.
The IFWG
plans to host another workshop this year, and is working on a policy paper
setting out the South African policy position on fintech and innovation in the
financial sector, which is expected to be released in 2019.
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