The FSB has identified 10 areas that merit the authorities’ attention, three of which have been identified as priorities for international collaboration.
The priorities include managing operational risk from third-party service providers, mitigating cyber risks and monitoring macro-financial risks that could emerge as fintech activities increase.
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“Regulators need to understand the impact that developments in fintech can have on financial stability, especially given the rapid rise of innovation in this space,” said Carolyn A Wilkins, senior deputy governor at the Bank of Canada and chair of the FSB’s fintech issues group.
“Our report today sets out a clear picture of supervisory and regulatory issues, which the FSB will continue to monitor and discuss going forward.”
The report has developed a framework to define the scope of fintech activities to be covered and classified them.
Potential benefits of fintech identified by the report include decentralisation and increased intermediation by non-financial entities, greater efficiency, transparency, competition and resilience of the financial system, greater financial inclusion and economic growth.
Associated risks include institution-specific micro-financial risks and system-wide macro-financial risks.
The FSB’s report has also highlighted the need for the official and private sectors to improve data on fintech applications and for regulators to understand the changes to the business and market structure.
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