Does your FSP participate in Open Finance? The FSCA requires certain information relating to Open Finance
In June the Financial Sector Conduct Authority (FSCA) published the Open Finance Draft Position Paper (Draft Position Paper) for comments. The position paper sets out the policy approach by the regulator when it comes to regulating Open Finance in South Africa.
The FSCA now requests certain information from all financial institutions and Third Party providers that participate in Open Finance. This was requested in the FSCA Information Request 2 of 2023 (General) in October. The information must be submitted to the FSCA by no later than 10 November 2023.
Where do I submit the Information?
Click HERE to access the online form through the Authorities’ website.
What is Open Finance?
Open Finance supports financial institutions in sharing their customers financial data with third party providers (TTPs) for the provision of Open Finance Services.
It relies on open APIs (Application Programming Interfaces) and data sharing to facilitate third-party developers and fintech firms in accessing and integrating financial information and services from multiple sources to assist a third party in the development of financial services for a financial customer.
This empowers individuals and businesses to authorise the sharing of their financial data with external service providers, moving away from the traditional control of banks and financial institutions over customer data and services.
This allows for the development and provision of innovative and personalised financial services and products to customers by third parties.
What Happens If I Don’t Submit the Information?
If an entity participates in Open Finance and fails to submit the requested information within the specified timeline it will be seen as an offence under section 267 of the Act and will, therefore be liable on conviction to a fine not exceeding R1 000 for each day during which the offence continues.
I Have Some Questions, Please Help!
For more information regarding this Information Request please contact the Financial
Technology Department of the FSCA at Nolwazi.Hlophe@fsca.co.za.
We are also here to answer any questions that you may have.
We recently did a study for an international law firm group where we assessed Regtech and Fintech. What we saw is that these technologies are in the early stages of disruption of the financial services industry globally and in South Africa as well but that their growth is fast and the change is going to be permeating.
With $36 Billion (yes, that's 9 zeroes) invested in 2016 in Fintech, the industry certainly has allot going for it. It can potentially cause allot of job loss or job creation, depending at how you look at it. Me, I'm a glass half-full kind of guy so I like to think that these changes are to the betterment of us all and that people can (if they are willing and able) migrate to other professions that will be born from this disruption or that other jobs will be created in startups and smaller companies. Even if AI does take over many human roles in financial services, I believe one is still going to need allot of human interaction to provide a good service (as was evidenced by some recent interactions I had with a bank that it is so focused on leveraging tech that it is bleeding clients due to the lack of human assistance when things go boom).
Automation and AI has essentially been around us for quite a while now and for some reason people tend to not think about these simple things as AI. They usually think of AI as some smooth talking humanoid robot. AI is defined by the Merriam Webster dictionary as:
1 : a branch of computer science dealing with the simulation of intelligent behavior in computers.
2 : the capability of a machine to imitate intelligent human behavior
Now, if you take your average mobile phone, for example. It is an AI device but we don't realise it. Yes, some people use it to only call or play a game of Angry Birds but for others it's a powerhouse of automation (if you're not refreshing facebook or your emails every minute that is, because that will kill your productivity quickly). As beauty is in the eye of the beholder so is tech in the hand of the user. It's all about how you use this technology that's going to make the difference.
"As beauty is in the eye of the beholder so is tech in the hand of the user."
Whether Fintech will become as accepted in South Africa as it is already in other parts of the world remains to be seen. What is clear is that more and more companies are getting on the bandwagon even in South Africa. Even regulators are taking more notice as we've seen at the Financial Services Board FAIS Conference earlier in the year where they gave their commitment to regulate these new Fintech services.
by: Horizon Compliance team