The IFWG currently comprises of National Treasury, the Financial Services Board, the Financial Intelligence Centre and the Reserve Bank.
Deputy Governor of the central bank, Francois Groepe, said South African policymakers and regulators had been following the developments and discourse on fintech very closely.
“Authorities should, therefore, not merely acknowledge or observe innovation, but should actively review fintech innovations with a view to ensuring proportionate and consistent authorising and licensing regime,” Groepe said.
“The Twin Peaks model of financial sector regulation, which is currently being implemented, aims to put in place a regulatory framework that better responds to the dynamic nature of the financial sector, including fintech”. In February, the Sarb announced the establishment of the Fintech Program designed to assess the emergence and regulatory implications of fintech.
The Financial Sector Regulation Act came into effect at the start of this month and promises to bring about a major transformation in the South African financial services regulatory framework, including the move to a Twin Peaks approach to regulation.
Two new regulators came into operation - the Prudential Authority (PA) and the Financial Sector Conduct Authority (FSCA). Both the PA and FSCA were expected to publish regulatory strategies within six months of their establishment, setting out in further detail their intended regulatory focus areas and work plans over the next three years
Head of advisory at Nedbank, Shabbir Norath, said the need by traditional banks to stay relevant in an increasingly disrupted environment would have them keeping a very close eye on the fintech industry.
“And as the fintech sector grows, and the consumer market it appeals to expands, we can be certain that the number of large, industry-changing fintech mergers and acquisitions in South Africa will increase exponentially,” Norath said.
The EY FinTech Adoption Index 2017 found that South Africa is due for substantial growth in the sector over the next few years. EY forecasts 71percent growth in the fintech industry in South Africa.
An associate at Webber Wentzel, Seshree Govender, said with the knowledge of an impending regulatory regime, the fintech industry was now left in regulatory purgatory.
“The industry now needs to decide whether it should speed ahead in further expanding in the hopes that it will amass a consumer base and, following that, justify its continued operation in a post-regulatory world - or whether it needs to slow down in fear of impending regulations requiring an overhaul of its operations,” Govender said.
Groepe said policymakers and regulators needed to dedicate attention to fintech innovations and be supportive of them.
Meanwhile, the Sarb has agreed to co-operate with the Bank of England (BoE) on training initiatives in the Twin Peaks approach to financial regulation, enhancing macro prudential surveillance and policy frameworks and closer co-operation on fintech.
The Sarb said it had also recently signed a Memorandum of Understanding to enhance co-operation with the European Central Bank.