23 Jun 2019

Bank of Botswana and the International Monetary Fund (IMF) will hold a two-day Bali Fintech Agenda conference in Gaborone starting on June 24.

The fintech agenda brings together key considerations for policy makers and the international community to discuss 12 key areas.

This comes at the time when advances in financial technology (fintech) have evolved rapidly, completely changing the financial services industry.

Developed by the IMF and the World Bank in December last year, the Bali Fintech Agenda seeks to address international cooperation and guidance on how to address challenges and opportunities brought by advanced technological developments.

According to the IMF website, it has been noted that rapid advances in financial technology, while advancing the economic and financial landscape, also brings risks such as money laundering and funding of terrorism activities.

Advances in technology has seen some financial institutions such as commercial banks transforming their operations, introducing products such as online and mobile banking, and in some measures they have closed down or cut down their branch expansions.

Recently Standard Bank (operating as Stanbic Bank in Botswana) closed more than 100 branches in South Africa, with the Botswana managing director Mr Sam Minta saying while they do not anticipate closures, they would continue to invest in training and upskilling their staff to equip them with necessary tools to get through the digital economy.

As for the IMF and World Bank, financial technologies have grate potential and therefore should be embraced as they have far reaching social and economic impact, especially in low-income countries and small states.

There are also benefits to be derived from fintech such as increased access to financial services and financial inclusion, deepened financial markets and improved cross-border payments and remittance transfer systems.

According to the IMF and World Bank, reaping the benefits from fintech would require preparation, strengthening of institutional capacity, expanding outreach outreach to stakeholders and adopting cross-agency approach involving relevant ministries and agencies.

There is also a need to have necessary infrastructure such as broadband internet, mobile data services and payment and settlement services to allow efficient data collection, processing and transmission, which are central in fintech advances.

Among the other elements is the need to reinforce competition and commitment to open, free and contestable markets to level the playing field and to promote innovation, consumer choice and access to high-quality financial services.

Another objective is to monitor developments closely to deepen understanding of evolving financial systems to support the formulation of policies that foster the benefits of fintech and mitigate potential risks.

There is also need to adapt regulatory framework and supervisory practices for orderly development and stability of the financial system and facilitate safe entry of new products, activities, and intermediaries, sustain trust and confidence and respond to risks.

Another element addresses the need to safeguard the integrity of the financial systems by identifying, understanding, assessing and mitigating the risks of criminal misuse of fintech and by using technologies that strengthen compliance with anti-money laundering and combating the financing of terrorism measures.

“While fintech innovation generally supports legitimate goals, some innovations may enable users to evade current controls for criminal ends, thus posing a threat to financial integrity,” reads the fintech statement on the IMF website.

Other elements are to modernise legal frameworks to provide an enabling legal landscape, ensure the stability of domestic monetary and financial systems, develop robust financial and data infrastructure to sustain fintech benefits and to encourage international cooperation and information sharing across the globe.

The conference is expected to be attended by policy makers from government and the private sector as well as finance and technology experts.

According to the IMF, the agenda does not represent the work programmes of the IMF or the World Bank, nor does it aim to provide specific guidance or policy advice. Ends