Supervisory, regulatory frameworks boosting digitalisation agenda – Addison

Dr. Ernest Addison, the Governor of the Bank of Ghana (BoG), has disclosed that the strong regulatory and supervisory frameworks underpinning Ghana’s payment systems have enhanced the financial digitization process.

According to the Governor, the Bank of Ghana took prudent steps to tackle cyber-attacks in the financial sector which is the main risk associated with digitisation.

“Digitisation has come with risks which threaten customer trust and has the potential to unwind the gains of acceptability of digital products and services.”

Dr. Ernest Addison explained that, issues of cybercrime, scams, phishing, data and privacy breaches, digital illiteracy and unresponsiveness to customer complaints; pose serious threats to consumer confidence in digital financial services.

In view of this, he indicated that the Bank of Ghana has issued directives, regulations, policies and guidelines on Cyber Security, to assist market players to deal with such threats.

“It is important to note that the burden of security awareness is not only on market players. Indeed, the emergence of new and digital financial solutions has introduced significant complexities in regulation and supervision as well.”

Dr. Addison noted that the debates on financial sector digitisation must as well be centered on regulatory technology and supervisory technology.

He agreed that the current manual supervisory tool is unproductive, hence the need for the technology based.

“Therefore, discussions on creating an enabling environment for financial sector digitization must also focus on regulatory technology (RegTech) and supervisory technology (SupTech). Presently, the manual supervisory tools are ineffective in the supervision of digital financial service ecosystem due to its dependence on digital technology, high frequency and dense data, fast transactions, complex and evolving systems” he added.

The Bank of Ghana Governor, thus, revealed that the Central bank made a significant investment in the technological tools, which has condensed the problem of financial regulation.

“Consequently, the Bank has invested in SupTech tools to exercise effective oversight and supervision of digital financial services and reduce the burden of reporting on regulated entities. An online reporting analytic surveillance system (ORASS) has been set up to facilitate submission and improve analysis of prudential and other regulatory returns.”

The Governor hinted that the Central bank is considering a new intervention that can process raw data and examine it for trends, to enhance policy formulation. He further disclosed that another project, which is customer centred, is in the bank’s plans. This, he asserted, will help address market performance conduct.

“A complementing supervisory intelligence tool that accepts granular data which are analysed for patterns and trends for timely evidence-based policy interventions is also on-board. An additional Chatbot project, which is an automated consumer complaints management system is in the offing and will help address market conduct concerns.”

In the financial industry, technologies are tearing down barriers to entry and opening doors for new financial service providers.

As technology develops, there has been a rise in customer expectations of banking, not least from the instant and personalized services provided by the leading technology firms. FinTechs have shown what is possible, and that all banks need a digital plan. For those who are skeptical, since the lockdown, there have been a 72% rise in the use of fintech apps in the world.