Towards robust regulatory frameworks for fintech regulation in South Africa

Abstract

In the light of the Fourth Industrial Revolution (4IR) and the acceleration of Financial Technology (FinTech) innovations, especially during the COVID-19 pandemic, this study reassessed the financial regulatory frameworks. FinTech presents opportunities for more accessible, efficient, and cost-effective financial services; however, it also introduces new risks concerning soundness, stability, and customer protection. This research examined the evolving financial regulatory landscape, emphasising the Twin Peaks Model, which separates prudential and conduct regulation. The study evaluated international best practices, and the benchmarks set by standard-setting bodies and other Twin Peaks jurisdictions. It proposes practical regulatory and policy measures to integrate FinTech into the South African regulatory framework and developed joint standards for the regulation of FinTech in South Africa. Given the rapid technological advancements and the intricate nature of FinTech, the research advocates for principle and rules-based standards focusing on technological outcomes rather than the technologies themselves. The study underscores the importance of understanding these shifts to maximise the benefits for all the people of South Africa.