Dhaka, Bangladesh (BBN)– Country’s payment service providers will have to take prompt remedial measures against frauds and forgery for ensuring public confidence in the financial system, the Bangladesh Bank (BB) has said.
Cross-border financial transactions need to be dealt with due diligence because of increasing cyber threat, complexity of transactions and involvement of multiple cross-frontier jurisdictions, it warned.
The BB’s latest warning came against the backdrop of rising trend in Fintech ecosystem in the last couple of years mainly on payment and clearing systems in Bangladesh.
Fintech is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services.
The use of smartphones for mobile banking and investing services are examples of technologies aiming to make financial services more accessible to the general public.
“… Fintech is in nascent stage to pose any major systemic threat, it still requires close regulatory supervision and monitoring due to its constant evolutionary nature with the latest technology,” the BB said in a study on the Financial Stability Implications of Fintech in Bangladesh, released recently.
Fostering well-regulated Fintech solutions in cross-border foreign exchange transactions would enhance remittance inflow through legal channels, which has favourable implications for financial stability, according to the quarterly Financial Stability Assessment Report for July-September 2018.
On the other hand, extensive use of Fintech such as credit cards for purchasing foreign goods and services might cause leakage of foreign currency from the country, it noted.
“Easily available Fintech solutions might incite transactions beyond legal boundary like hundi,” the report cautioned.
From the current perspective of Bangladesh, likely vulnerability of Fintech on financial stability may transmit largely through payment system mechanism, the stability report said.
Apart from the payment system, which might be susceptible to cyber security and other operational risks, the systemic risk from other channels of Fintech is still considerably low, according to the BB.
“Fintech paves the way for payment system development, which can contribute to develop a more integrated, efficient and less frictional financial system,” the report explained.
It said a large number of players constitute Fintech ecosystem in Bangladesh including regulators, Fintech companies, investors, financial institutions and end-users.