Namfisa Deputy CEO: Prudential Supervision, Erna Motinga has said that the regulatory body is moving towards finalising the Fintech regulatory sandbox that would drive financial inclusion and innovation while at the same time, helping to mitigate some of the risks emerging in the financial space.
Motinga, who was speaking at Namfisa’s first ever Fintech Square last week, further noted that the platform would provide an opportunity for upcoming innovators and in particular the youth to participate in the transformation of the financial services industry.
Namfisa FinTech Square was established in response to the changing digital dynamics in the financial space and in line with the just ended financial sector strategy (2011-2021).
“The Namfisa Fintech Square is a platform where the regulator meets the innovator. It will be celebrated annually as part of the Namfisa calendar and will take different forms. For instance, this year is aimed at gauging the innovations within the market as we are moving towards the envisaged Namfisa regulatory sandbox. And so, throughout the course of today we will have discussions around what is currently in the market and how we can we meet some of the aspirations of the aspiring innovators.
“Taking account of today’s engagement, we intend to incorporate some of the concerns raised in finalising our proposed regulatory sandbox,” Motinga said.
The Sandbox is an “incubatory” platform where financial innovators would “test” their innovations in a controlled regulatory environment. This might mean the relaxation of legislative requirements or even exemptions.
“Namfisa would have access to the same platform to understand underlying implications of the innovation on the financial services sector in general and consumer protection. This is an important initiative, as it enables a more dynamic and evidence-based regulatory environment. In this regard, the Authority will learn from and evolve with emerging technologies, ultimately promoting inclusion, competition, diversities and efficiencies in the financial services sector,” Motinga said.
The financial Services industry is undergoing an unprecedented transformation across the world driven by digital technologies. These technologies are reshaping business models and operations in financial services, a reality that the COVID-19 pandemic has further accelerated. Our experience over the last few months since the occurrence of COVID-19 is that it is no more business as usual.
“During the hard lockdowns, we have seen how technology has aided many households not only to access financial sector services but enabled the provision of goods and services in other sectors of the economy.
While this is making financial services more diverse, competitive, and inclusive, it has its implications on the financial services sector through emerging risks and opportunities. And as we all know, the emergence of these digital technologies in financial services have been coined as Financial Technologies or Fintech, in short,” Motinga said further.
Fintech has been defined as digital technologies that have “the potential to transform the provision of financial services. This spurred the development of new or modifying existing business models, applications, processes, and products.”
“While the term “Fintech” has been used around for a while, it’s worth taking a fresh look at the financial services industry in the face of rapidly advancing technology and a multitude of new players. The Fintech industry encompasses technology-enabled firms offering financial services (Business to Business – B2Bs), as well as entities providing technology services directly to financial institutions (Business to Consumers – B2Cs).
“Technological advances, changing demand for financial products and competition in financial services are all driving a new wave of Fintech start-ups and Fintech investments. This – inevitably – have drawn attention to the financial services sector globally in recent years.
“The world over, start-ups are creating innovative products and services to penetrate new areas of the financial services industry, ultimately changing the competitive landscape and access to financial services. These new forces are motivating traditional financial firms to invest in technology and to pay attention to changing trends among their customers and other stakeholders. All new and existing financial services players, and financial services regulators will be impacted by the changes we see happening in the marketplace today,” further explained Motinga.