An analysis of potential financial stability implications from FinTech by the Financial Stability Board (FSB) has prioritised the need to manage third-party service provider risk.
The report outlined 10 areas in FinTech with supervisory and regulatory issues that merit authorities’ attention.
The need to manage operational risk from third-party vendors, mitigating cyber risks and monitoring macro-financial risks that could emerge as FinTech activities increase, were listed as the top priorities.
“Regulators need to understand the impact that developments in FinTech can have on financial stability, especially given the rapid rise of innovation in this space,” said Carolyn Wilkins, senior deputy governor at the Bank of Canada and chair of the FSB’s FinTech issues group.
A lack of complete data on FinTech applications and the need for regulators to understand how business and market structure are changing should also be addressed.
The FSB added regulators and national authorities should take FinTech into account in any risk assessments and regulatory framework.
“Our report today sets out a clear picture of supervisory and regulatory issues, which the FSB will continue to monitor and discuss going forward,” Wilkins concluded.