Our FinTech work involves making sure our regulatory settings support innovation and industry-based solutions in financial services. At the same time, we need to improve our understanding of the possible effects of fintech on the soundness and efficiency of the financial system.
Combining the words ‘financial’ and ‘technology’, FinTech refers to technology-enabled financial innovation, which is changing the way financial institutions provide – and consumers and businesses use – financial services.
As in many industries, technological innovations are one of the main drivers of change across financial services and present many opportunities for businesses, regulators and consumers alike.
However, with opportunity comes risk. We recognise the need for regulation that:
We want to explore how FinTech developments could help us achieve our mandate — promoting a sound, efficient and dynamic monetary and financial system, and enabling the economic wellbeing of all New Zealanders.
We are concerned about new risks to financial stability and that FinTech initiatives may unintentionally exclude some people's access to financial products and services.
We can see FinTech opportunities in the following areas:
We want our regulatory settings to support innovation and industry-based solutions in financial services.
We are keen to ensure we and the regulatory frameworks we operate do not prevent digital innovations in financial services from thriving in New Zealand.
We have been working with other agencies in the Council of Financial Regulators to develop a 1-stop advisory service for FinTech businesses (https://fintech.govt.nz/). This is intended to provide information on regulatory requirements, which is useful to fintech businesses when developing new products and services.
Over time, these developments may suggest that we need to make changes to our supervisory approach and the types of entities or activities we regulate.
FinTech affects a number of our work streams. The major projects which are currently exploring FinTech opportunities are as follows.
Cash allows access to the financial system for those who are digitally excluded or face other barriers to making electronic payments. It also provides a back-up means of payment in cases of personal emergency or system outages.
We are particularly interested in hearing from individuals and businesses with innovations that can enable financial inclusion or that are considering innovative solutions for personal finance.
Read more about the Future of Money — Te Moni Anamata
We work closely with our Pacific neighbours and recognise the economies of many Pacific nations rely on remittances. However, the cost of sending remittances to the Pacific are among the highest in the world.
In partnership with agencies in New Zealand and overseas, we are exploring what could be done to make sending remittances to the Pacific easier and cheaper.
We are also interested in supporting longer-term sustainable improvements for the payments infrastructure in the region.
Read more about our Pacific Remittances Project
We work with other agencies in the Council of Financial Regulators (CoFR) to ensure a ‘one voice’ approach and to create a clear and consistent regulatory pathway so businesses can navigate New Zealand’s regulatory landscape with confidence.
CoFR agencies and the Department of Internal Affairs have established a single point of regulatory support and information for the fintech sector.
While we believe the current regulatory system is flexible enough to allow innovative approaches to develop, we will continue to work closely with our stakeholders to identify and remove any unnecessary barriers that prevent new businesses from entering the financial system or existing ones from developing FinTech solutions.
Currently, we have prioritised three research topics relating to FinTech:
This topic involves us learning about technology that can:
This includes:
We want to know more about the range of tools that will enable us to analyse regulatory returns and data more efficiently and with more insight. This includes understanding the large volumes of unstructured data we receive. This data is often difficult to access and analyse.
We have an ongoing interest in developments in central bank digital currencies including research and current projects by our international peers.
The Future of Cash Use – Te Whakamahinga Moni Anamata
An open mind on open banking (Financial Stability Report, May 2018)
Decrypting the role of distributed ledger technology in payments processes (Bulletin, May 2018)
The pros and cons of issuing a central bank digital currency (Bulletin, June 2018)
Fintech developments in banking, insurance and FMIs (Bulletin, November 2018)
If you want to find out more or get in touch please contact us at [email protected].
If you are a business, please provide basic information about your product or service, and about your business in New Zealand. We aim to help businesses understand our regulatory regime and the challenges they may face when developing an innovative product or business model.