The Fintech sector’s rapid advance into traditional finance has regulators looking to ensure global financial stability
The Financial Stability Board (FSB), an international body that monitors and makes recommendations about the global financial system met in Tokyo this week to assess the fintech industry’s potential to disrupt the international financial system. The meeting comes at a time when financial services are undergoing a monumental transformation.
The FSB, made up of bankers, regulators and finance ministry officials from the G20 economies, agreed to a framework for categorising different components of fintech. Also discussed were possible steps to address potential risks and the need to develop regulatory perspectives.
The group reviewed major areas of technological innovation within finance including blockchain technology, which is widely believed to be one of the most disruptive technologies. Explosive growth in global fintech has seen investment in blockchain and other financial technologies from the entire spectrum of the finance industry including leading banks Goldman Sachs, Citi, Barclays and many others.
According to FSB Chairman and Bank of England Governor Mark Carney “The important thing for us as members of the FSB is to be moving in parallel with these developments and not be stifling innovation, but being able to apply them in a way that improves the resilience of the system.”
The board meeting, led by Chairman Carney struck an overall cautious tone. Issues of consumer protection, regulatory compliance and financial stability considerations were of top priority.
As is often the case in the financial industry, regulators continue to lag behind advances in technology. While we may not see reforms and regulations implemented in 2016, the fintech sector is moving closer to a changing reality that includes a stricter regulatory environment.