New central bank platform to encourage FinTech developmentsPrint
New central bank platform to encourage FinTech developments
Budapest, 20 March 2018 – As of today, the MNB supports the safe spreading of new FinTech initiatives in financial markets while preserving financial stability by launching an Innovation Hub. The new initiative was presented to the leaders of FinTech firms, financial institutions and business associations by László Windisch, the Central Bank’s Deputy Governor responsible for financial institutions supervision and Anikó Szombati, Executive Director, during a professional consultation held today.
In 2017, the Magyar Nemzeti Bank (MNB) carried out a comprehensive research to assess developments in the FinTech innovation market. Firstly, the overview of the approaches related to financial innovations covered banks, FinTech firms, venture capital firms and consumers, then the Central Bank involved insurers, funds as well as financial intermediaries in the research. The surveys have confirmed that in the domestic financial intermediary system – both on the demand and supply sides – there is significant demand for the safe application of innovative financial services.
To facilitate this, the central bank has worked out proposals that are in line with international practices as well. The realisation of innovative ideas promoting sustainable convergence may be supported efficiently by an Innovation Hub available on the MNB’s website from today, while later a Regulatory Sandbox may also be set up in Hungary. Detailed information on the new MNB initiative was presented by the MNB to leaders of FinTech firms, financial institutions and business associations at a professional consultation held today.
On the one hand, the Innovation Hub supports the spreading of FinTech solutions as an information repository updated continuously. In connection with various financial services, regulatory and supervisory requirements are shown here in a well arranged and searchable format for new market participants, as well. In addition, through its communication hub function, the Innovation Hub serves as an information sharing platform for the entire FinTech ecosystem (e.g. for FinTech firms, banks, insurers, law offices and venture capital firms).
The website also operates as a regulatory support platform: the MNB provides help for FinTech innovators through guidance in order to clarify legal issues in finance-related subjects arising in connection with their innovations. In the meantime, establishing contacts with experienced foreign counterparts active in the subject of FinTech has also started; accordingly, the platform may also perform international cooperation platform tasks in the future.
Cost efficiency and competitiveness of the financial sector may be improved through FinTech solutions. Increase in efficiency through innovation may have a positive impact on financial stability and the functioning of institutions, and the users of financial products and services may also benefit from it. Therefore, innovation may provide substantial support to sustainable economic convergence as well.
Without adequate regulatory and supervisory control, certain technical innovations may have unfavourable effects as well, creating financial stability, prudential and consumer protection risks. Therefore, it is necessary to set up frameworks that are able to adequately facilitate the spreading of innovations while minimising potential risks. The objectives are to find the balance between the excessively permissive and prohibitive approaches as well as to motivate FinTech innovations through cooperation between the regulatory, financial supervisory authorities and the market, while preserving financial stability.