Regulatory Collaboration on Innovation in South Africa: The Whole is Greater Than the Sum of its Parts

Introduction

The South African Reserve Bank (SARB), as one of the founding members of the Intergovernmental Fintech Working Group (IFWG), was awarded the ‘Fintech Policy of the Year’ award from Central Banking for its part in the establishment of the IFWG Innovation Hub in April 2020. As described by the IFWG Chairperson at the time, the establishment of the IFWG Innovation Hub stemmed from a true desire to effect change and to help its members execute on their mandates rather than simply being ‘innovation theatre.’ This article provides further background on the IFWG and some of its current initiatives.

Background: Establishment of the IFWG Innovation Hub

During 2016, the SARB became increasingly involved in working groups with international standard-setting bodies focused on fintech innovation, which prompted reflection on the potential implications for South Africa, the region and the continent. The SARB found likeminded partners in the National Treasury as policymaker, the Financial Intelligence Centre in its role of ensuring the integrity of the South African financial system, and the Financial Sector Conduct Authority (FSCA) as market conduct regulator. Over time, the shared appreciation that certain types of financial and technological innovations would have cross-cutting implications for these stakeholders, while crucially respecting individual roles and mandates, led to the establishment of the IFWG towards the end of 2016.

The IFWG actively strives to understand the growing role of fintech firms and innovation, including ‘business unusual’ innovation by incumbents, in the South African financial sector. The IFWG accordingly explores how regulators can assess emerging risks and opportunities in the market more proactively in order to promote responsible innovation. Membership of the IFWG has since expanded to include the National Credit Regulator, the South African Revenue Service and the Competition Commission.

In parallel with ongoing IFWG-related developments, the SARB has continued on its own journey in considering a response to financial services innovation driven by advances in technology. To this end, the SARB established ...

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