South Africa’s financial regulators on April 7 launched the Intergovernmental Fintech Working Group (IFWG) Innovation Hub in response to changes in the financial sector driven by financial technology (fintech) and to promote responsible innovation in the sector.
The IFWG Innovation Hub provides assistance to innovators in the fintech space with the assistance of IFWG members, including the Financial Intelligence Centre, the Financial Sector Conduct Authority, the National Credit Regulator, the National Treasury, the South African Revenue Service and the South African Reserve Bank.
The IFWG Innovation Hub is open to all financial sector innovators, whether a startup, an established fintech firm, an incumbent financial services provider or an adjacent industry entering the financial services market, such as retail or telecommunications.
The IFWG Innovation Hub is intended to support the sector in introducing innovations that complement the core mandates of regulators, including financial stability and soundness, consumer protection, financial inclusion and fair lending practices.
Fintech innovation leverages technology to address inefficiencies and other challenges in the financial sector by embracing agility, adaptability and responsiveness, traits that are essential as local and global economies navigate this period of uncertainty, according to the IFWG Innovation Hub.
To help address the expected economic impact of the Covid-19 pandemic, the IFWG believes innovation among fintech firms and other financial sector innovators is required now more than ever and, therefore, must be supported.
The benefits associated with the Innovation Hub include clarification on the regulatory landscape, access to a space for testing the regulatory fit of innovative solutions and participation in initiatives and forums helping to shape the future of financial sector regulation on emerging fintech topics.
Users of the IFWG Innovation Hub have access to three avenues for assistance, including the units of Regulatory Guidance, Regulatory Sandbox and the Innovation Accelerator.
The Regulatory Guidance Unit’s aim is to help market innovators resolve specific questions regarding the policy landscape and regulatory requirements. Financial sector innovators with questions on fintech or innovation-related financial sector regulation are encouraged to visit the IFWG website and submit an enquiry to the Regulatory Guidance Unit.
Regulators will continue to process queries through digital and virtual means; however, as a result of the Covid-19 pandemic, response times may depend on the volume and complexity of queries and will be provided on a best effort basis.
The Regulatory Sandbox provides financial sector innovators with an opportunity to test new products and services that push the boundaries of existing regulation, all under the responsible supervision of relevant regulators. Participants must apply to the Regulatory Sandbox through an application form found on the IFWG website.
The purpose of the Innovation Accelerator is to provide 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. Outcomes of these coordinated efforts will be shared on the IFWG Innovation Hub website.
Through the IFWG Innovation Hub, the organisation is committed to providing these resources to fintechs and other financial sector innovators beyond the Covid-19 pandemic.
Over time, it is the IFWG’s desire that its efforts to promote responsible financial sector innovation could have the potential to generate economic benefit for individuals, businesses and the country as a whole.