{"id":432284,"date":"2020-09-09T08:57:37","date_gmt":"2020-09-09T06:57:37","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=432284"},"modified":"2020-09-09T08:57:37","modified_gmt":"2020-09-09T06:57:37","slug":"regulations-should-allow-mobile-networks-to-become-your-next-bank-commission","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/telecommunications\/432284\/regulations-should-allow-mobile-networks-to-become-your-next-bank-commission\/","title":{"rendered":"Regulations should allow mobile networks to become your next bank: commission"},"content":{"rendered":"

The Competition Commission has published a paper<\/a><\/strong> on competition in South Africa’s ‘digital economy’ and the measures that can be introduced to promote inclusion.<\/p>\n

The commission said that it favours a regulatory approach that promotes the inclusion of fintech and enables access to the national payments system.<\/p>\n

Rather than protecting existing incumbents, regulation should protect the payments system for the benefit of consumers, it said.<\/p>\n

“In this regard, the financial regulators should explore regulation that can allow non-banks such as mobile network operators to enter the national payments system; settlement and clearance system.<\/p>\n

“In particular, financial system regulators should review the ecosystem of regulation that enables entry and participation in the system, including licencing and trading condition, data ownership, portability and system operability.”<\/p>\n

Fintech regulations needed\u00a0<\/strong><\/p>\n

Currently, there are greater levels of regulation targeting those institutions regarded as posing a high systemic risk, that is the \u201ctoo big to fail\u201d and \u201ctoo large to ignore\u201d group of companies, and less on fintech and big tech, the commission said.<\/p>\n

However, the commission said that fintech and big tech also tend to operate outside of traditional sector regulation: financial stability, anti-money laundering, and consumer protection.<\/p>\n

This means that regulatory design for the inevitable competition arising from the entry of tech players must be ‘appropriate’, it said.<\/p>\n

“To prevent systemic risks, regulation should put the relevant ‘walls’ to manage potential harm if commercial and banking functions are blurred.<\/p>\n

“It should be noted that regulating part of the market whilst ignoring a significant portion which poses a systemic risk, namely fintech and big tech, is the real systemic risk. Capturing these functions through regulation would enable better oversight and prevent shadow banking.”<\/p>\n

Cashless\u00a0<\/strong><\/p>\n

As a digitalised world can be exclusionary for many citizens, particularly the poor, deliberate consideration of inclusion by policymakers is pertinent, the commission said.<\/p>\n

Promoting greater inclusion of citizens in financial services is ultimately both a function of innovation and regulation, it said.<\/p>\n

“Banks, mobile network operators and the private financial sector role-players should begin the relevant innovations and product offerings that will deliver a cashless future for South African consumers.<\/p>\n

“The challenges that South Africa has faced regarding the payment of social grants over the years have been more starkly pronounced during the current Covid-19 pandemic, as millions of citizens must collect relief grants in-person from physical pay-points.”<\/p>\n

The commission said that solutions by firms that enable the participation of marginalised groups should, in principle, be supported through regulation.<\/p>\n

However, South Africa\u2019s regulatory framework has not always achieved this balance, as has been the case concerning mobile money operators and their attempts to access the payment system, it said.<\/p>\n

“Mobile money operators in South Africa constitute as non-banks. They, therefore, cannot settle and clear payments and must therefore be sponsored by a registered bank to operate.<\/p>\n

“This dependency increases costs for the operator and constrains its ability to be an effective competitor with registered banks.”<\/p>\n

Speaking to stakeholders during its banking inquiry, the commission said that\u00a0there were conflicts of interest between banks and mobile money operators which made such joint ventures difficult.<\/p>\n

“The current review of the payment system regulation should consider how best barriers to entry can be lowered, whilst continuing to guard against systemic risks,” it said.<\/p>\n

\n

Read:\u00a0Capitec revises earnings outlook lower<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

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