Regulators and financial technology industry figures took another step in their quest to fully understand the emerging fintech space and develop relevant regulation, as they joined forces with international partners.
The Financial Services Commission (FSC) on Monday welcomed a number of representatives from several countries who are experienced in the fintech industry in an effort to discuss new trends, challenges, opportunities and possible measures and policies.
During the two-day seminar at the Hilton Resort, held under the theme Sustainable DeFi (decentralized finance) and Financial Inclusion, officials were expected to gain a deeper understanding of how fintech is evolving in several jurisdictions including China and Africa.
Experts are also hoping that the discussions will help to inform the regulatory policy decisions that Barbados is expected to develop in an effort to continue to grow the fintech space.
Chief Executive Officer of the FSC Kester Guy said while Barbados has “a perception of what we would want to see” for the fintech industry, officials had to be “very aware and conscious to ensure that the system is kept safe”.
He said it was therefore critical that Barbados learn from those who are already in the space.
Guy said: “This is a growing area of interest in Barbados and there have been several discussions and fora where we have tried to address the regulatory perspective for new digital assets or finctech broadly.
“We are constantly looking to see how we can tailor the regulation that makes it efficient and effective for the types of businesses that would dabble in that space.”
Pointing to the proliferation of online peer-to-peer trading platforms and digital currencies, Guy said it was critical that the FSC ensure it was “on top of the developments”.
He said the two-day seminar would help to put the FSC in a better position to “provide the proper educational platform for investors so they are aware and conscious of what they are involved in as well as the business sectors or entities providing these services”.
“Unless we have a good hold on what are the issues in our system, we may not be aware as to what is the appropriate interventions that need to be made,” he said.
Like many other countries, Barbados is still in the process of deciding what regulatory regime was needed to govern firms operating in the fintech industry.
So far, the FSC in collaboration with the Central Bank of Barbados, had implemented what is called a regulatory sandbox, the first of which was used to test the increasingly popular Barbados-based financial technology firm Bitt.
The regulatory sandbox, which is tailored to the specific company, was established towards the end of October 2018, and is used to test the innovations of the participating company in a restricted space for a specified period to determine if the service, product or business model should be regulated by existing legislation, new legislation or if it should be regulated at all.
Guy told Barbados TODAY that several other fintech companies have expressed an interest in getting involved in the sandbox regime, adding that that up to last week discussions were held with one of those firms and potential terms and conditions were outlined.
“They are now to go back to the table and provide us with certain other information and then we will determine the next steps,” said Guy.
Co-organizer of the two-day seminar Chris Brummer, Faculty Director at the Institute of International Economic Law at Georgetown University, said he saw fintech as one of the fastest growing areas in the financial services sector and there was growing interest.
But Brummer said there was an ongoing need for officials to ensure the sector remains efficient and safe.
“That’s what these kinds of dialogues are supposed to do, and to help them learn what kinds of risks lessons that they can learn from one another and the experienced regulatory community,” he said.
Adding that officials were eager to “bring in traditionally excluded or marginalized communities” into the financial space, and enhance customer experience for those already in the digital payment industry, Brummer said he was trying to help countries build out “a 21st century market infrastructure that is sustainable”.
He said having the correct infrastructure was necessary to support the growing fintech industry.
Brummer said: “It is really new and complicated and we don’t have a regulatory infrastructure yet in the same way that we have for the traditional legacy financial infrastructure. And that is where the risk rises for consumers and for investors.
“At the same time, there is potential for gains, and one of the challenges the regulators are having is how do you find the best risk reward balance for people who are engaging in these new kinds of financial products.”