The balance between FinTech innovations and regulatory compliance in South Africa

Abstract

Financial Technology (FinTech) is an emerging trend that is transforming the financial industry by introducing innovative ways for businesses and customers to engage in transactions. This study explores the balance between FinTech innovations and regulatory compliance in South Africa, a country with one of the most mature financial systems in the world. Despite the absence of specific FinTech regulations, FinTech companies in South Africa are required to adhere to the same stringent regulations as traditional financial institutions. For this study, fifteen subject matter experts (SMEs) were interviewed to address the research objectives. The objectives were met through a thematic analysis of the in- depth, open-ended interviews. Using Institutional Entrepreneurship Theory, this study examines the roles of internal and external stakeholders and their influence on regulatory development and implementation. The findings underscore the importance of proactive collaboration between industry stakeholders and regulators in designing policies that are both effective and conducive to innovation. The study highlights the regulatory gaps and emphasises the need for clearer guidelines to ensure sustainable growth in the FinTech sector. While regulations present challenges for FinTech organisations, this research concludes that regulation is crucial for promoting good innovation. However, for regulation to foster growth, it must be crafted in a way that supports flexibility and adaptability, rather than restricting innovation.