Question

Financial technology, also known as FinTech is an industry composed of companies that use new technology and innovation with available resources in order to compete in the marketplace of traditional financial institutions and intermediaries in the delivery of financial services.

The use of mobile apps is embedded in the average Mauritian’s everyday life while the country already provides services such digital insurance, mobile banking amongst others.

Several enterprises, particularly those aiming towards Africa, are already using Mauritius as a viable Fintech platform. The stable business climate and well-established corporate governance culture in Mauritius, favorable time zone, excellent connectivity and highly-educated labour, mitigates the high-risk profile of certain African countries.

Question :

Considering the Mauritian context , justify what could be the possible drawbacks of Fintech.

Answer to be in 1000 words

Answer 1

Fintech is any financial sector related technological innovation. It includes retail banking, financial literacy and crypto currencies. They are becoming new trend and craze which is affecting financial and IT sector.

This technology is used by new entrants to deliver their services to business and consumers. This has also challenged the old working landscape.

Some of the active areas in Mauritian context are -

· Cypto currency

· Block chain technology

· Digital insurances and cyber security

The broad variety of technological interventions to personal and commercial purpose, since every innovation comes with some challenges and drawbacks fintech has also has certain disadvantages like -

Legal Framework- Mauritius has two main regulatory body viz. Bank of Mauritius and Financial Service Commission so Bank of Mauritius regulates banking sector and Financial service commission regulates non-banking sector so according to Mauritian law the contract to buy and sell are governed by civil law and for operational and regulatory work banking act, financial security act are considered. Fintech is bringing revolution in financial service landscape and sector. Its challenging to make this phenomenon work as efficient and transparent.

According to World Economic Forum, 10% of total GDP of the world will be stored in blockchain which might not be safe for the information stored on the cloud. The challenge is big data analytics and regulation compliance. The market shares away from financial institution and give option to consumers.

The rise in competition will be there, which can also bring unfair means to lead the market. Regulators have to keep the check for compliance and risk. The fair information needs to pass to the end consumer.

The state laws can by bypassed as there are a lot of gaps.

The credential and data of users are accessed by company. The RSL Regulatory Sandbox License is allowing company from financial and medical sector to work without formal legislative licensing framework.

Steep downfall can be seen if banking and financial sectors are not coming up to terms with technology and give better products to consumers.

In the fast pacing economy and competitive era technology is the boon and would open opportunities. The dependence on it is inevitable, with regulations and strict compliance this new perspective of Fintech can change the face of financial sector.