​Australia partners with Kenya for fintech development

Financial regulatory authorities from both jurisdictions have signed an agreement that will encourage the discussion of cross-border technology concerns.

The Australian Securities and Investments Commission (ASIC) has signed a cooperation agreement with the Capital Markets Authority of Kenya (CMA) in a bid to boost financial services technology for both countries.

The agreement, signed in Hong Kong during a board meeting of the International Organization of Securities Commissions (IOSCO), establishes a framework for both parties that allows the sharing of information on their respective markets such as emerging trends as well as regulatory issues.

According to both parties, the partnership has been established as a result of the growing need to compare regulatory road blocks with other regions, with ASIC noting that innovation in the fintech space is not confined by national borders.

"The CMA has recently commenced efforts towards the establishment of a Regulatory Sandbox structure that is designed to encourage innovation in the capital markets. This strategy reflects the CMA's role in facilitating the introductions of new fintech products in the capital markets area," Paul Muthaura, chief executive of the CMA, said in a statement.

"ASIC has developed an innovation hub and we are keen to share best practices in terms of how to address regulatory issues pertaining to innovation in financial services."

ASIC launched its innovation hub in 2015, which it said has since received many requests from fintech startups for assistance with regulatory issues.

The Australian regulator has also recently consulted local parties including the Australian government on the establishment of its own regulatory sandbox that proposes an environment to allow startups to test concepts without a licence.

With responses currently under consideration, the sandbox is expected to enable startups to manage the regulatory risks, providing the probable project outcomes are favourable to Australia.

Earlier this year, the federal government published its vision of the future of fintech in Australia, with its underlining message that financial technology is transforming the nation's financial system.

At the time, Treasurer Scott Morrison said he wanted to see fintech in Australia become the focus of creative thinking and business activity, and that fintech was going to revolutionise how business interacts with consumers.

"Australia already has a sophisticated, competitive, and profitable financial sector underpinned by a strong regulatory system," he said. "As financial services become more globalised and technological disruption more relevant, we need to keep pace with innovation in banking and finance to stay competitive."

It was reported in April that ASIC was also working on a deal with the Monetary Authority of Singapore (MAS) that would see fintech startups in both countries work together to allow cross-border business.

Singapore has been working on its own sandbox initiative that the MAS expects will allow local firms to experiment with new fintech products under less stringent regulatory requirements.

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