There is absolutely nothing wrong with technology and innovation. The culture has been given the right hand of fellowship and the robust dynamic change in its progressive process to get better and better has been encouraged and esteemed.
However, there is a puzzling question still to be answered in Uganda. How are financial innovations regulated? That is the query that has caught the eyebrows of experts to rise and wonder into the unknown.
Technological innovations are increasingly piling pressure on government and regulators to adapt to new trends to remain relevant.
Financial technology (Fintech) is for instance threatening traditional banking jobs and creating a headache for regulators across Africa and Uganda. One of the dilemmas is whether Fintech should be regulated as finance or as technology.
During the first annual Fintech Africa conference in Kampala last week, experts wondered who regulates financial technology.
“How do you regulate a service that relies on mobile phone to operate and enable peer to peer lending? If technology enables payments and offers advice in insurance and banking, should it be regulated by Uganda Communications Commission, Bank of Uganda or the Capital Markets Authority?” David Mpanga, a partner at Bowmans, a law firm, wondered.
He said Fintech is also spreading into loans, savings and investment banking.
It is driven by technology innovations such as the Internet and in Africa especially the mobile phone.
According to Mr Mpanga, Fintech does not necessarily create new risks, but expands regional financial services and speed up financial transactions. However, through this, the level of risks increases rapidly.
Cyber security threat
Mr Bram Peters, the country technical specialist for Digital finance at the United Nations Capital Development Fund in Uganda, said Fintech is increasingly exposed to cyber security. “Cyber security and use of data (ownership, security, privacy etc.) has not been well-addressed and is a looming risk,” he said.
He said creativity and imagination, plus the ability to collaborate and partner will be the new core competences can create competitive advantage in financial services.
Mr Joel Muhumuza, a partner at Financial Sector Deepening Uganda, said: “…the largest impediment to innovation and development is unclear legal environment and institutions that define the space and give recourse where necessary.”