- What is FinTech?
- The word “FinTech” is simply a combination of the words “financial” and “technology”.
FinTech is an across-the-board term that refers to software, mobile applications and other technologies created with the specific objective of improving and automating the traditional way of doing business for institutions or consumers in the financial sector.
FinTech can be understood as the category where technology is integrated into offerings by traditional financial institutions in order to improve their operations, use and delivery to consumers, or in order to create an alternative platform where these traditional institutions deliver their financial service digitally.
Four main FinTech areas that are of particular interest because of the rapid pace at which they are growing, include digital lending, blockchain solutions and digital asset management.
- What is FinTech Square?
FinTech Square, the NAMFISA Innovation Station, explores the concepts and evolution of FinTech in the Namibian non-bank financial sector by connecting NAMFISA to innovators, consumers, industry players and fellow regulators who are leading players in technological and digital transformation.
- Why does FinTech Square exist?
FinTech Square is born from the vision to connect NAMFISA with the leading technological players in the Namibian non-bank financial sector, well as to better understand technological and digital transformations in the non-bank financial sector, so that as a regulator, we could help promote such innovations.
The NAMFISA FinTech Square is the platform which hosts two initiatives. Firstly, the FinTech Square is the platform from which the NAMFISA Regulatory Sandbox is launched and operated. Secondly, the FinTech Square hosts annual thematic Square events relevant to all topics related to financial technology and digital transformation.
- What is a FinTech solution or innovation?
A FinTech solution or innovation is not subject to one strict definition. The concept of FinTech solutions or innovations refers to either one of the following two types of innovations:
- Innovations in the financial sector that uses technology to offer a completely new and digital platform for users, that promotes alternative business models and a new, efficient and beneficial way of doing business; or
- Innovations that provide significant improvements in the way business is done currently, which improves efficiency in financial service delivery or increases overall access to financial services.
These innovations may be business-to-business (B2B) based, meaning that all services are provided directly to the business in order to streamline, automate or improve efficiency in their operations or service delivery. Alternatively, these innovations may be business-to-consumer (B2C) based, meaning that all services are provided directly to the consumers of the financial product or service.
- Are FinTech solutions relevant to Namibia?
Both the prevalence and need to accommodate FinTech solutions in Namibia are supported by NAMFISA’s experience and learnings from the first ever NAMFISA FinTech Square event in 2022. FinTech Square is the NAMFISA Innovation Station and in 2022, the FinTech Square event was held with the objective to connect the regulator with the innovator in order to gauge FinTech advancements and understand the needs of the Namibian innovator in the non-banking financial sector.
NAMFISA received applications from interested innovators country wide, as well as Namibian innovators situated internationally and can confidently conclude that this initiative is highly valued by Namibian FinTech innovators as they try to navigate the changing economic landscape, which is moving towards digitization and technological advancement.
Digital innovation is growing in Namibia and FinTech solutions will become more prevalent in the country. Therefore, we need to join hands as regulators, institutions, innovators and consumers to successfully navigate the changing financial sector environment
- What benefits do FinTech solutions offer to the Namibian economy?
At its core, FinTech is used with the purpose of helping institutions, small business owners and consumers better manage their financial operations, processes or lives through specialized software and algorithms used on computers or even smartphones.
FinTech innovations have the potential to benefit both consumers and small businesses. These benefits could include expanding access to financial services, reaching underserved consumers, reducing transaction costs, offering greater convenience and efficiency, and enabling better controls over spending and budgeting.
Depending on the end-usage and the nature of the solution, users, consumers, as well as businesses, can benefit from FinTech solutions. Some benefits include the following:
- Access to financial services is expanded, which means that financial inclusion is promoted and underserved consumers are reached through FinTech;
- Efficiency is at the front seat, since FinTech either improves existing processes, such as payments or complaints handling, or it fully automates a process, which would ultimately streamline the entire process;
- Transaction costs are reduced, which offers greater convenience;
- Better resource allocation, since processes are streamlined in institutions and financial service delivery is more efficient for the consumer and better controls over spending and budgeting is enabled; and lastly,
Through the usage of artificial intelligence and big data analytics, the consumer receives an absolute customized and personalized experience.
Of course, all of this is only possible in a financial environment where financial risks are adequately identified and appropriately managed to ensure that consumers can enjoy these benefits while remaining financially protected.
- Any specific risks that FinTech solutions pose to consumers?
Most risks posed by FinTech to consumers is in relation to the potential misuse or abuse of data. These risks are mostly captured in cyber risk, which relates to risk regarding data privacy and security, fraud and scams and non-transparent uses of data due to non-disclosure.
These risks are not new to financial services delivery, but becomes more prominent when business is done on a digital platform through FinTech solutions.
However, do not be discouraged to side in favour of adopting or using financial technological solutions. As the regulator of the non-bank financial sector, NAMFISA is committed to maintaining a non-bank financial sector that is financially sound and stable and wherein consumers remain protected at all times and therefore, NAMFISA has several initiatives that will be implemented to ensure the above remains true in an environment where digitization becomes more prominent.
- What are some of these initiatives that NAMFISA will introduce in regards to FinTech solutions?
NAMFISA has several initiatives currently and anticipated that specifically addresses FinTech innovations and solutions.
Firstly, we have established the NAMFISA Innovation Station, titled FinTech Square, which is the innovation hub of NAMFISA. FinTech Square will host annual events with focus placed specifically on FinTech solutions, advancements and education.
In 2022, FinTech Square was held with the theme of connecting the regulator with the innovator. Over the short-term, FinTech Square events will continue with the theme of connecting, by connecting the regulator with institutions, consumers and innovators, and connecting those players among themselves. FinTech Square events will grow and deepen as we progress.
In addition to FinTech Square, a fully-fledged NAMFISA Regulatory Sandbox will be launched in 2023 for the non-bank financial sector, where FinTech innovators can safely test their solutions in a controlled environment with live consumers while under the supervision of NAMFISA. Through the Regulatory Sandbox process, NAMFISA will learn about specific risks, safeguards and mitigations regarding FinTech innovations, so that ultimately, these FinTech innovators can launch their solutions legally and safely in the broader non-bank financial sector where all financial institutions remain stable and while all consumers remain protected.
- Who can partake in FinTech Square?
Any Namibian innovator regardless of which region you are situated in, is invited to participate in FinTech Square
- How can one contact FinTech Square?
The NAMFISA FinTech Square team is reachable via email through email@example.com .