This FinCoNet report examines how financial supervisors can adapt their regulatory frameworks and supervisory practices to address the challenges and opportunities presented by digital financial products and services (DFPS). It emphasizes the importance of implementing risk-based supervision approaches to effectively oversee the evolving digital financial landscape.
The report highlights that while only 15% of supervisory authorities had adapted their regulatory frameworks to digital realities at the time of the survey, there is a growing recognition of the need to do so. It identifies key risks associated with DFPS, including cybersecurity threats, data privacy concerns, and the potential for increased financial exclusion. To mitigate these risks, the report suggests that supervisors should enhance their off-site surveillance capabilities, utilize advanced data analytics, and engage in continuous dialogue with industry stakeholders.
Furthermore, the report underscores the necessity for supervisors to invest in technological tools and expertise to keep pace with rapid digital advancements. It recommends the establishment of internal working groups focused on digital innovation and the development of early warning systems to promptly identify emerging risks. By adopting these strategies, supervisors can better protect consumers and ensure the stability of financial markets in the digital age.
