Regulators must listen to the market when developing policy

CEO of eTranzact Global, Valentine Obi CEO of eTranzact Global, Valentine Obi

The Chief Executive Officer of eTranzact Global, Valentine Obi, has urged central banks and economic policy decision-makers to consult key market players and consider market sentiments in their decision-making process to ensure balanced policies that matches the perspectives of the players.

He reiterated that policies play a crucial role in promoting the growth of the financial sector and that central banks, as torchbearers of formulating regulations and policies for the health of the financial space and overall economic growth, must take into account market perspectives and should incorporate feedback into their decision-making process.

“There needs to be more interaction between banks, regulators and fintechs. The regulator is the one who guides everyone, but it is also important that the market operators are involved in the development of some of the regulations, because if you create regulations that involve stakeholders, the market itself would force the players to apply them , which becomes the work of the supervisor. even easier.

“The central banks should therefore not see themselves as they know everything. They have to listen to the market.

The consideration should always be about what is the risk that we want to address and how do we use the market participants to develop some solutions to the challenges,” he said.

He made these comments at the 2024 3i Africa Summit in Accra, during a panel session on the theme: “Banking and FinTech Intersection: Balancing Innovation, Risks, and Inclusion.”

The panel viewed digital economy policies in Africa, seen through the lens of industry leaders, as a delicate balance between promoting innovation, managing risk and promoting inclusion.

Focusing on the perspectives of the current policy landscape, the challenges faced by both Fintechs and financial institutions, and the strategies they are using to navigate this dynamic environment, Mr Obi emphasized that some policies are forcing players to find means to survive, but ultimately central banks must make decisions that are in the best interests of the overall economy, and the success of market players is the success of the overall economy.

The banking sector must be receptive to future fintech disruptions

Mr Obi further urged the banking sector to remain receptive to future fintech innovations to meet the changing needs of customers.

He underlined the importance of maintaining the current relationship and trust between banks, fintechs and mobile money providers, stressing that getting banks to initially accept the disruptions from fintechs was an unmanageable task. Now that there seems to be more cooperation, the need for sustainability can no longer be realized. get too much emphasis.

Fintech innovations such as mobile banking platforms, digital wallets, blockchain technology and artificial intelligence have the potential to continually revolutionize the way banking services are delivered.

He explained that fintechs have a different mentality than banks. Therefore, banks must adopt and collaborate with fintech companies to leverage these innovations for the benefit of both parties and customers.

“As Fintech entrepreneurs, we think slightly differently. We think about potential and opportunity, while banks think about risk and control over assets, because they have to be very careful with customers’ money.

“The imperative here is how we put these two together. My understanding from the banks is that if they don’t really understand the solution you are bringing, they quickly inform management that it is risky and as soon as management hears from the evaluation team that something is risky, that option is completely disabled,” he says. said.

However, over the years, banks have come to understand how relevant some of these solutions are and are now powering digital financial systems, which is a good phenomenon, he added.