The Banking Executive Magazine, Issue 154, October 2021

ISSUE 154 OCTOBER 2021 the BANKING EXECUTIVE 1 Editorial REGTECHS Payments are technical and crucial in the banking industry, often referred to as its corner stone. It is a key vector for trust and confidence in the adequate functioning of the financial systems. As technological innovations are opening up new opportunities for payments, it is required that these payments are both secure and efficient with adequate infrastructure. Regulators are supporting technological innovations, through the development of more efficient regulation or "Regtechs", to go hand in hand with low operational risks and high transaction safety. The recent growing trend of the preponderance of electronic payments versus traditional paper- based ones is today’s reality. The physical dematerialisation of money towards entirely digitalized ones, such as solutions embedded in smartphones or other consumer devices, highlights the importance of payments in many aspects of our economy, and sheds lights on the need of a comprehensive strategy, since payments are the nexus where a new ecosystem based on technological innovation and entrepreneurship is blooming. The Fintech innovations are generating significant benefits among which is promoting financial inclusion all over the world, as long as people are provided with internet access. On the other hand, we have to be careful with this innovation that might be accompanied with new threats for our financial system. For instance, it raises challenges in terms of fraud and security, given the multiplication of actors involved in payment and financial processes. New "cyber" risks are an acute concern for the whole industry. Another concern is endangering financial stability over the longer term, as a result of the process of increased automation in the development of High Frequency Trading for instance that could hamper the resilience of financial markets in times of stress. Rethinking the regulation and re-engineering Regtechs so as to strike the right balance between innovation and security is needed, such as: maximizing the spillover effects of innovations, protecting the consumer and addressing financial stability issues, and ensuring that innovation is beneficial to all parties, in particular in the form of new services and costs reduction. Such a balance can only be reached through adequate and proportionate rules, and reinforcing the need for fruitful dialogue and cooperation between all parties concerned. Dr. Joseph Torbey, Chairman - World Union of Arab Bankers