IMF warns against FinTech risks

The International Monetary Fund’s (IMF) deputy managing director has warned that while FinTech can support productivity and growth by strengthening financial development, inclusion and efficiency, it “may pose risks to consumers and investors and, more broadly, to financial stability and integrity”.

Speaking at a conference in Vilnius, Lithuania, earlier this week, Tao Zhang said that FinTech is expected to promote competition in the financial sector, particularly in payments clearing and settlement.

“However, there is a perception that FinTech brings risks too, and that monitoring is still limited and largely confined to activities and entities in the regulatory perimeter,” he said, adding: “Gaps in the legal framework are widely acknowledged, as is the need to modernise data governance frameworks.”

Zhang called for greater international cooperation, particularly on cyber security and Anti-Money Laundering risks, the development of legal, regulatory and supervisory frameworks, securities settlement systems and cross-border payments.

Recognising these opportunities and potential challenges, last Autumn the IMF and the World Bank launched the Bali Fintech Agenda, bringing together key issues for policymakers to consider as countries formulate their policy approaches.

“In the coming days we will present the conclusions of a new study conducted to better understand how the countries in the world are dealing with these issues,” Zhang explained. “This work clearly indicates a common concern about cyber security, money laundering and payment services and a need for greater international cooperation in FinTech.”

Regarding Europe, the growth of FinTech has been rapid, but unevenly distributed, with Western Europe leading the way, he stated.

“Some countries in Europe have been encouraging FinTech innovation and exploring regulatory responses proactively, unfortunately, this is not going to be enough – technology knows no borders, neither does financial misconduct.”

Zhang concluded by cautioning against the fragmentation that comes when countries develop isolated national approaches.

    Share Story:

Recent Stories

The Rise of Instant Payments
Instant payments are creating new business opportunities for banks by providing more touchpoints than ever. With these evolutions underway, Featurespace brought leading industry experts together to discuss how they are protecting customers from fraudsters in real time, utilizing innovative and disruptive solutions to reduce fraud. Click here to find out more.

Offloading Cyber Risk in the Cloud
As cyber attacks and data breaches are in the news on an increasingly regular basis - with regulatory penalties and customer trust on the line for financial services firms - it has never been more crucial to be compliant in the cloud.

This video, with Akamai’s EMEA director of security technology and strategy Richard Meeus, will help explain what your company can be doing to make sure it’s not embroiled in the next big fine or front-page scandal.