P2P regulation on the rise in Mena countries
67 per cent of jurisdictions in the Middle East and North Africa (Mena) have their own regulatory framework for peer-to-peer lending, with more regulation planned across the Mena region.
According to a new report from the Cambridge Centre for Alternative Finance (CCAF) at Cambridge Judge Business School, University of Cambridge, regulators are taking “positive steps to create an enabling environment for fintech”, accelerated by the Covid-19 pandemic.
This includes increased regulation of P2P lending and crowdfunding platforms, as well as enhanced scrutiny of e-payment systems and a crackdown on cybercrime.
75 per cent of Mena regulators said that they have noticed an increased cybersecurity risk to fintech as a result of the pandemic. The report also found that Mena fintech operators were more concerned about the risk of cybersecurity than their European counterparts.
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The importance of fintech has also become more apparent to Mena regulators during the pandemic. 85 per cent of regulators said that they believe fintech can support market development, while 77 per cent said it can promote financial inclusion and 69 per cent believe it can promote competition.
“The Mena region has seen a rapid increase in fintech activity and there is evidence of regulators adapting,” says Alexander Apostolides, acting lead, regulatory innovation at CCAF.
“However, the existence of regulatory frameworks is uneven, both in fintech verticals and in terms of jurisdictions.”
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The regulators told the CCAF that some of the obstacles in forming regulator frameworks include limited technical skills, difficulty co-ordinating across multiple regulators, limited funding for regulators in the region, and the small size of the industry making it harder to justify a bespoke regulatory solution.
“In the Middle East and North Africa region, regulators have taken positive steps to create an enabling environment for fintech through a combination of regulatory frameworks and regulatory innovation initiatives,” says Robert Wardrop, director and co-founder of the CCAF.
“This study assesses how a range of fintech activities are regulated in the region, including understanding which regulators have a mandate for specific fintech verticals, and whether activities are regulated by existing or bespoke frameworks, as well as noting which regulators plan to introduce regulatory frameworks in the near term.”
The survey found that 92 per cent of Mena jurisdictions have created regulatory frameworks for payments, and another 92 per cent have regulations in place for e-money.
69 per cent of the regulators polled said that they have a bespoke equity crowdfunding framework with another eight per cent planning to introduce one.
Meanwhile, 23 per cent of jurisdictions have an open banking framework in place, with 54 per cent planning to introduce open banking regulations in the near future.
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