In theory, building the capacities of regulatory authorities in the field of Fintech seems straightforward: Providing courses and webinars on Fintech related topics. In practice, however, Fintech disruptions demand a complete different set of skills beyond theoretical knowledge.
The Fintech Academy was born from the idea of providing a structured 2-year capacity building programme to prepare regulators for new Fintech providers and business models. It consists of modules that build upon each other, enabling participants to raise both capabilities and develop structures within the authorities.
What have we learned after one year of the Academy?
Theoretical knowledge is important, but best when complemented by peer-exchange and practice-oriented activities.
Providing basic knowledge on Fintech was indeed straightforward. An online course for example equipped the participants with the needed Fintech basics. With Fintech innovations rapidly evolving there is however a need for in person peer-exchange on common challenges and trends. And yet, within each country specific context, a focus on practice-oriented activities including situation simulations and role plays is crucial to prepare the regulator for innovation and enabling regulation.
Fostering the exchange between regulators and innovators is really important and shouldn’t be forgotten.
One important characteristic of innovation promotion structures such as innovation offices and regulatory sandboxes is the increased engagement between innovators and regulators. Nevertheless, due to their different jobs and networks, exposure to and understanding of each-others’ interests is usually challenging. It is thus important to take these preconditions into account and support the creation of a mutual understanding, a common ground and in turn a barrier-free communication.
“If I hear about a new Fintech solution, now I think differently about it. Before I didn’t know much about it and therefore thought everything was ‘risky’. […] I have learned the see and test approach from the Academy. There are currently partnerships between Fintech and incumbents in the financial sector, that are being tested to learn. We will then decide if and how to regulate”
(By a Fintech Academy participant)
The Fintech Academy has been acknowledged as successful within and outside the regulatory authorities. At the same time, it must be acknowledged that the fully acceptance of disruptive technologies and innovation in the financial sector will be gradual. Due to the regulatory authorities’ responsibility to ensure a stable and safe financial system, opportunities and risks of Fintech must be outweighed thoroughly. The success of year 1 of the Academy has been a good starting point for Fintech promotion and especially a solid proof of the authorities’ commitment to shift towards innovation in the financial sector.
By Sofia Bublatzky