The adoption and use of technology in the provision of financial services has been at the centre of innovation in the financial sector.  Technology is changing the way financial services providers operate and deliver products and services to their customers. The accelerating pace of technological change has real implications not only for the regulated sector but also for policy makers and regulators.

Recent IMF/World Bank reports and the Bali FINTECH agenda point to the fact that the parallel financial products present financial stability risks across bank functions (payment services, customer relations, retail and commercial banking, wholesale banking markets, wholesale payments, clearing and settlements infrastructure). In November 14, 2018, the managing director of the IMF, Mme Christine Lagarde urged regulators to “keep an open mind” and to address their efforts towards a regulatory framework “that minimizes risks while allowing the creative process to bear fruit”. Regulators have to develop regulatory policy frameworks, structures and architecture that align to the ever changing financial services landscape.

The 14^th Basel Committee on Banking Supervision – Financial Stability Institute (BCBS –FSI) High Level Meeting for Africa which was held in Cape Town, South Africa from 31 January to I February 2019 discussed how bank regulators and supervisors have to assess their current staffing and training programmes to ensure that the knowledge, skills and tools of their staff remain relevant and effective in supervising the risks of new technologies and innovative business models.  The theme for the high level meeting was “Strengthening Financial Sector Supervision and Current Regulatory Priorities”. Discussions centered on supervisory authorities adopting forward looking intervention mechanisms to ensure financial sector stability. The meeting deliberations stressed the need for early identification and intervention of potential problems to prevent problems from becoming dire.  They also stressed the importance of embracing innovative technological financial services at the same time finding ways of developing policy structures that ensure balance development and financial sector stability.

The Institute is looking to continue working closely with central banks from its member countries, in order to develop capacity building activities in this area in 2019 and beyond. In 2018, MEFMI conducted awareness workshops for central banks on a bilateral basis on the risks to demystify and explore policy issues relating to technologies. In 2019, the focus will be to take awareness further by collaborating with other international stakeholders such as the Alliance for Financial Inclusion (AFI) and the IMF Monetary and Capital Markets (MCM) division to enhance skills in the region.

In addition to awareness workshops on FINTECHs, MEFMI intends to work with member countries that are planning to adopt Regulatory Technology (RegTech) and Supervisory Technology (SupTech) to develop the capacity of their staff skills in this area.

SupTech is currently found primarily in two areas; data collection and data analytics and helps supervisory authorities to digitise reporting and regulatory processes, resulting in more efficient and proactive monitoring of risk and compliance at financial institutions. FINTECH, RegTech and SupTech are all new innovations that supervisors have to embrace while ensuring that the risks posed by such innovations, particularly to financial stability are adequately managed and mitigated.