IMF Releases Note on Fintech Supervisory Monitoring
In order to ensure that global regulators can sufficiently supervise the ever-evolving fintech industry, the International Monetary Fund (IMF) has released a note detailing supervisory approaches. Regulators need to act dynamically in order to effectively oversee and monitor fintech firms, and simultaneously manage the risks as the industry evolves and technology develops. The IMF identifies four main pillars of the supervisory model: existing supervisory structures, innovation hubs, sandboxes and TechSprints. Each play an important role in establishing appropriate oversight, reflecting the different pace that the fintech market develops when compared to traditional financial services firms. In summary, the IMF stresses that there is no one-size fits all approach to effectively monitoring firms, and regulators need to assess how they can best support firms to innovate in a safe (and managed) environment.
The soon to be implemented Financial Services and Markets Bill (FSMA) 2023 is set to empower UK regulators to implement long-promised changes of the regulatory framework that oversees the UK financial sector. As host to one of the largest Fintech ecosystems globally, the UK’s ability to act dynamically will likely be a focus for firms, with the regulator keen to foster innovation and technological developments. With the main themes from the IMF’s note emphasising increased collaboration and testing across market participants, the UK seems to be following appropriate steps to ensure it is equipped to maintain a suitable regulatory framework that fosters innovation. It is this framework that will be benchmarked against international peers as the UK looks to maintain its position as a global fintech incubator.
