After a pilot project went well, the Bank of Ghana recently showed off its Regulatory and Innovation Sandbox, which was built with the help of EMTECH Solutions Inc. This was applauded by the GFPA. The GFPA is Ghana’s Fintech and Payments Association. It is the foremost fintech hub and not-for-profit organization established to promote the advancement of financial technology and payment solutions.
This is in line with the Bank’s promise to keep building a regulatory framework that encourages innovation, financial inclusion, and financial stability.
Due to the myriad of enabling policies that the Bank of Ghana and the Government of Ghana have implemented as part of the national digitalization agenda over the past two years, and during the pilot, the utilization of digital financial services among Ghanaians has seen a remarkable increase. This is because there has been an increase in the national digitalization agenda.
Individuals, businesses, government ministries, departments, and agencies have all been encouraged to adopt digital financial services as a result of the restrictions placed on the movement of people as part of the COVID-19 containment measures. These restrictions were implemented as part of the COVID-19 containment measures.
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Financial Institutions in Ghana have started using Artificial Intelligence
In a similar vein, Ghanaian financial service providers are rapidly adopting emerging technologies such as artificial intelligence, machine learning, and data analytic tools. This opens up huge opportunities for new products and services, like chatbots, Know Your Customer (KYC) and Customer Due Diligence (CDD) solutions, anti-money laundering and fraud monitoring platforms, credit scoring for digital credit products, and customer-centred product designs.
When implemented on a widespread scale, the electronic version of the Ghanaian currency, known as the eCedi, has the potential to stimulate innovation in digital financial services and further enhance the digitalization of the financial services industry. This potential exists within the purview of the Bank of Ghana.
On the other end of the digitization spectrum, blockchain technology seems to have a lot of potential to change how financial services are offered, even though it still needs time to develop.
Despite this, the Bank of Ghana made a courageous choice and allowed a blockchain solution into its Regulatory and Innovation Sandbox while it was in the pilot stage. This is another indication of the bank’s dedication to the innovation process.
The new developments will help small-scale businesses and Innovations
Against the backdrop of these developments, a Regulatory Sandbox is an opportune tool for harnessing the potential of technology to develop an efficient and inclusive financial services industry without risking financial stability.
More importantly, it will serve as a framework that enables small-scale, live testing of innovations by innovators (operating under a special exemption, allowance, or other limited, time-bound exception) in a controlled environment under the supervision of regulators. This testing will take place in a supervised environment.
It aims, among other things, to help regulators learn more about new products, services, and business models; to allow for possible changes to legal and regulatory requirements to cover new technologies; and to ensure that any risks are carefully watched and kept in check.
The Regulatory Sandbox is open to both licensed financial institutions (like banks, specialized deposit-taking institutions, payment service providers, dedicated electronic money issuers, financial holding companies, and other non-bank financial institutions) and unlicensed FinTech start-ups, as long as they have innovative products, services, or business models that meet the requirements of the Regulatory Sandbox.
For innovations to be considered for the sandbox, they will need to fit into one of the following broad categories:
Innovative and disruptive digital financial service products can address a chronic financial inclusion challenge. Digital financial services technology is new and immature. On the Bank of Ghana website, interested licensed or unlicensed financial or non-financial institutions can find the Regulatory Sandbox Framework, a user guide, and a link to use the platform. This will provide direction and accessibility to the institutions.
Through the implementation of this project, the Bank of Ghana reaffirms its commitment to creating an environment conducive to innovation to advance financial inclusion and facilitate Ghana’s digitalization and cash-lite agenda. With the help of FSD Africa, we will work with several stakeholders, such as industry organizations, associations, and innovation hubs.