CB advocates calculated approach towards fintech
CB Governor says technological progress has to be moderated in order to prevent too much disruption Monetary Authority of Singapore Chief Fintech Officer says Sri Lanka could become a worldclass fintech centre
Sri Lanka’s Central Bank Governor Dr. Indrajit Coomaraswamy is advocating a more measured approach to financial technology (fintech) in the country, despite the significant industry opportunities highlighted by an official from the Singaporean Central Bank.
“What we have been thinking of in the Central Bank is how we respond to fintech. One worry is whether the disruptive aspects of fintech would cause damage to the market, the banking and non banking financial institutions,” he said.
He said that while the Central Bank cannot ignore the potential benefits of fintech, technological progress has to be moderated in order to prevent too much disruption in the financial services sector.
“You can have a modular approach to phase this in,” he said.
Dr. Coomaraswamy noted that resisting change will also not be to the benefit of the market, since the service providers might disappear like dinosaurs, once consumers start using fintech not provided by the traditional market players.
“We shall disappear if we can’t adapt in an environment, which contains spaceships, computers and thermonuclear weapons.
Today, 17 years later, this sentiment is more pertinent and bears greater resonance as we are going through the 4th industrial revolution, characterized with robotics, artificial intelligence and 3D printing,” he said.
Fintech such as virtual currencies, peer-to-peer transactions among consumers and businesses, and more innovations to come could gradually end even the relevance of central banking, according to financial sector analysts.
However, Dr. Coomaraswamy expressed confidence in the Sri Lankan central bankers to grasp fintech better by noting how the Central Bank had set up Lankapay’s parent Lankaclear (Pvt) Ltd back in 2002.
Fiscal policy interferences however have already threatened this position held by the Central Bank.
Former Finance Minister Ravi Karunanayake, during the 2017 budget, proposed to set up a separate national payment gateway under the ICT Agency outside the purview of the Central Bank to facilitate peer-to-peer transactions, which drew widespread criticism.
Ironically, Karunanayake in the same budget proposed to protect the traditional leisure sector from innovative tourism technologies.
Meanwhile, Monetary Authority of Singapore Chief Fintech Officer Sopnendu Mohanty, who briefly touched upon the drawbacks of fintech, however said that the narrative has changed over the past 2-3 years into the situation today where fintech could gain more by collaborating with traditional market players.
He said that Sri Lanka could become a world-class fintech centre based on the demographics of the country.
“I think Sri Lanka could be a world-class centre for fintech to succeed. I truly believe that and I’m surprised at the (level of) fintech in Sri Lanka today. When I go back to Singapore, I will insist my Central Bank Governor to partner with Sri Lanka to work on fintech,” Mohanty said.
He gave a number of policy suggestions for Sri Lanka to develop a fintech environment as complex as in Singapore, which Dr. Coomaraswamy said that Sri Lanka should learn from.
Mohanty heavily stressed that investments in cyber security would be required in order to rely on fintech.