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Technology-driven innovation in finance, more commonly referred to as fintech, is an increasingly important part of financial services.
The SARB aligns with the Financial Stability Board’s working definition for fintech as “technologically enabled financial innovation that could result in new business models, applications, processes, or products with an associated material effect on financial markets and institutions and the provision of financial services.”
This all-encompassing definition of fintech refers to the impact of fintech on the financial sector and a range of innovative technologies and innovations by fintech firms and incumbent financial institutions. Fintech has the potential to deliver benefits to consumers through improved access to financial products, greater flexibility, more efficient delivery and service, and competitive prices.
The SARB recognises the importance of harnessing the benefits and opportunities of fintech but also managing the risks and potential policy trade-offs in developing appropriate policy, regulatory and supervisory frameworks in response to fintech.
The SARB’s Fintech Unit was established in August 2017, to explore the implications of fintech innovation for the SARB and financial services in South Africa in a structured, organised and proactive manner. The core value proposition of the SARB Fintech Unit is improving the understanding of the impact of fintech in financial services by focusing on these areas:
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Conducting research to assess the policy and regulatory implications of innovation in financial services
Conducting research to assess the policy and regulatory implications of innovation in financial services
Conducting research to assess the policy and regulatory implications of innovation in financial services
Conducting research to assess the policy and regulatory implications of innovation in financial services
Conducting research to assess the policy and regulatory implications of innovation in financial services
Within the SARB, the Fintech Unit has played a leading role on topics such as crypto assets, central bank digital currencies; open finance and tokenisation. It developed the SARB’s initial position on innovation facilitation structures (such as regulatory guidance units and sandboxes), which was used in further discussion with the broader regulatory community. The team has also been responsible for initiatives such as hosting the Southern African leg of the Global Fintech Hackcelerator, Project Khokha and Project Khokha 2, and the launch of the IFWG Innovation Hub.
In response to the rapidly evolving nature of fintech, South Africa established the Intergovernmental Fintech Working Group (IFWG) in 2016 as a forum for collective sensemaking among regulators and policy makers. The main purpose of the IFWG is to enable a more coordinated approach to developing policy and regulations in response to the impact of fintech. The IFWG launched the Innovation Hub in 2020, with three facilitators: the Regulatory Guidance Unit; the Regulatory Sandbox and the Innovation Accelerator. The SARB’s Fintech Unit co-leads the IFWG Innovation Hub with the Financial Sector Conduct Authority and supports the overall functioning of the IFWG.
Find the latest publications by the IFWG here.
Overview of the IFWG Innovation Hub
Regulatory Guidance Unit (RGU) helps market innovators to resolve specific questions regarding the policy landscape and regulatory requirements
Regulatory Sandbox (RSB) provides market innovators with an opportunity to test new products and services that push the boundaries of existing legislation and regulation responsibly, all under the responsible supervision of relevant regulators
Innovation Accelerator provides a collaborative, exploratory environment for financial sector regulators to learn from and work with each other, and the broader financial sector ecosystem, on emerging innovations in the industry.
For further information on the IFWG Innovation Hub, visit the IFWG website here, or view the FAQs here.
IFWG
BIS Innovation Hub
FSCA Fintech
SARB-Global Fintech Hackcelerator @ Southern Africa 2019
Project Khoka 1 Launch
If you have further questions about fintech, please do not hesitate to contact the IFWG directly at sarb-fintech@resbank.co.za.
