Financial technology (Fintech) start-ups are pushing for establishment of an independent regulatory body other than central banks to bolster innovation in the sector.
The Global Payments Innovation Jury while releasing its inaugural Africa report in Nairobi during a conference Wednesday said many businesses trying to reach the under-banked population face regulatory challenges as they try to drive payments innovations across the continent.
The jury said for the sector to succeed, start-ups need to overcome challenges such as access to funding and regulatory bottlenecks.
“Most regulators are drawn from the banking sector and they would tend to protect where they come from. They will not encourage anything that takes in new risks,” said John Chaplin, chairman of Jury.
“The payments business is complicated, it is changing very rapidly and most regulators are struggling to understand it,” said Mr Chaplin.
Currently, the sector is regulated by bank watchdogs in African countries and the jury is recommending separation.
The jury felt that regulatory action is detrimental to payments innovation and there is an opportunity for regulators to up their game, especially in relation to innovators and investors and in licensing non-bank payments companies.
The Jury, however, noted that regulatory framework in Kenya has encouraged more innovation in the sector than in other African countries.
The global jury body this year introduced an African Payments Innovation Jury consisting of 25 industry leaders from 14 markets to contribute to a research report on African payments and fintech innovation trends.
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