South Africa has been reported to have the potential of becoming a FinTech centre of excellence in Afrika. This is according to some experts and professionals in South Africa's financial services industry.
Some of these sentiments expressed are as a result of the South African Reserve Bank establishing a FinTech unit within the country's central bank to track the FinTech industry and advice on policy.
“Now that the South African Reserve Bank (SARB) has established a fintech programme to track and analyse developments, South Africa has all that is required to become a FinTech centre of excellence. We have an advanced banking and financial services system with a sound regulatory regime. We have extremely competent regulators, top entrepreneurial talent and innovative businesses that are attracting considerable local and global investments. The missing puzzle piece was a regulator focused on the fintech sector which has now been put in place, so there is no reason why South Africa cannot follow the UK and Singapore in becoming a fintech centre of excellence” says Collett,” said Dominique Collett, Senior Investment Executive at Rand Merchant Investment Holdings.
Collett also serves at the Head of AlphaCode, a club for fintech entrepreneurs in South Africa. One of the members of AlphaCode is Luno, a South African founded platform which allows people to buy, store and learn about crypto currencies.
“Regulation ultimately brings clarity to businesses and consumers. It helps keep out fraudsters, charlatans and other operators with low concern or capabilities to keep customer information and money safe. We’ve seen that regulation can have an extremely positive impact. It may even result in even more talent and investment capital flowing into the industry, unlocking further business models and bringing additional advanced products to market," said Marius Reitz, Country Manager 9South Africa) at Luno.
One of the regulatory challenges that South African central bank's mew FinTech unit will need to pay attention to is the issue of policy around crypto currencies. The other major challenge includes cybersecurity and fraud, as the SARB had already stated in a statement announcing the formation of the FinTech unit.
“The SARB initiative is very important because of the changing face of financial services driven by technology, the rise of social media and the change in consumer demographics and behaviour particularly those of millennials. The regulator needs to consider how to deal with this evolving space. Fintech is an enabler and not a threat to making financial services more relevant to a changing society. The SARB initiative will help to bridge this gap,” concluded Collett.
Cover image credit: Dominique Collett, AlphaCode.