South Africa Poised To Shake Up Its Fintech Sector With Bold New Rules

By  |  March 4, 2024

The proposed Conduct of Financial Institutions (COFI) Bill is poised to transform the South African finance sector, industry players reckon, promising increased competition and innovation, particularly within the fintech space.

Although the bill isn’t expected to be tabled before this year’s elections, Mpho Sadiki, Group MD at Network International, emphasizes the industry’s eagerness for its enactment. He underscores COFI’s potential benefits, especially in fostering low-risk, rapid innovation in fintech.

Designed to consolidate and streamline financial legislation, COFI will affect all financial institutions, from banks and insurers to credit providers, advisors, and even non-financial entities like telcos and retailers.

Sadiki comments, “A lot of work and consultation has gone into this legislation… In essence, it gives regulators the scope to govern institutions based on their activity.” He further explains that COFI will shift from the current sectoral approach to an activity-based one, ensuring uniform regulation for similar activities across different institution types.

Despite some resistance to additional regulatory burdens, Sadiki argues that COFI will create a level playing field. He emphasizes, “COFI is a big deal because it removes the limitations of who can provide services, opening up participation and injecting much-needed competition and innovation into the industry.”

Mpho Sadiki, Group Managing Director – Merchant Solution, Network International

For fintechs like Network International, providing payments infrastructure services, COFI presents opportunities for collaboration with traditional providers and merchants. Sadiki believes this will benefit both the market and consumers.

Sadiki elaborates, “South Africa has a mature and excellently regulated financial services sector… COFI stands to offer our industry far more opportunities than whatever inconveniences may come with revised or new regulations.”

COFI’s inclusive approach extends to instant payment mechanisms like PayShap, aiming to boost financial inclusion beyond traditional banking. Sadiki sees this as an opportunity for diverse participation, driving competition, and building trust in the financial system.

Addressing the impact on outsourced payment services, Sadiki emphasizes that compliant fintechs, like Network International, can provide regulators with confidence. This ensures rapid deployment of new offerings without concerns about restrictions or compliance issues, signalling a move towards true open banking.

Sadiki notes that COFI is in line to offer the industry more opportunities than inconveniences, paving the way for a more innovative and competitive financial landscape.

Featured Image Credits: RegTech Africa

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