Fintech has become an increasingly large priority for regulators during the pandemic, with cybersecurity seen as a key risk, a global report has found.
The Global Covid-19 FinTech Regulatory Rapid Assessment Study, which was produced by the World Bank and the Cambridge Centre for Alternative Finance (CCAF), found that 37 per cent of surveyed regulators around the world have taken at least one regulatory measure specifically targeting fintech.
78 per cent identified cybersecurity as the biggest risk, followed by operational risks (54 per cent), consumer protection (27 per cent) and fraud and scams (18 per cent).
And 90 per cent of surveyed regulators from advanced economies see cybersecurity as one of the top three increasing risks associated with fintech activities.
The study, which is supported by the UK Foreign, Commonwealth and Development Office, gathered responses from 118 central banks and other financial regulatory authorities in 114 jurisdictions worldwide.
Regulator respondents identified key challenges when it comes to regulating and supervising fintech activities during the pandemic.
The most common challenges related to performing core regulatory functions such as on-site inspections of firms, which was cited by 49 per cent overall, and 65 per cent of respondents from advanced economies.
39 per cent of regulators across the world found it difficult to coordinate with other domestic agencies, 29 per cent said it was hard to access accurate and timely data for the fintech sector, while the same percentage of respondents said that the increased demand on resources was a challenge.
And 28 per cent said they had restricted access to essential information or technology.
To support their work on fintech during Covid-19, regulators considered they would benefit most from skills development (80 per cent) and technical support (67 per cent).
“Covid-19 has been catalytic in pushing fintech up the agenda for regulators and is affecting regulatory approaches, practices and processes,” says Philip Rowan, lead in regulatory innovation at the CCAF. “The increasing digitalisation of financial services will require parallel innovation and transformation in financial regulation and supervision, encompassing not only technology but also changes in mindset and culture.”