IT transformation in the Prudential Authority of South Africa: A case study

Daniel Masiya and Kuben Naidoo

Contents

Foreword

Preface

Preface

Introduction: Suptech/regtech defined: Payments, sandboxes and beyond

1.

The uncertain prudential treatment of cryptoassets

2.

US regulatory certainty versus uncertainty for crypto and blockchain

3.

Bermuda: Suptech and regtech supporting the risk-based approach

4.

Suptech: A new era of supervisory philosophy

5.

Cloud computing in the financial sector: A global perspective

6.

DeFi protocol risks: The paradox of cryptofinance

7.

IT transformation in the Prudential Authority of South Africa: A case study

8.

Making the vision a reality: Perspectives from the Monetary Authority of Singapore

9.

Lessons from Hong Kong through the lens of the HKMA

10.

Technological change: Is it different this time?

11.

The ECB’s suptech innovation house: Paving the way for digital transformation of banking supervision

12.

China’s financing opening up and regulatory convergence with the world

13.

Disclosures and market discipline: The promise of regtech

14.

Regtech and new derivatives developments

15.

Fintech and regtech: Leading the evolution and regulation of alternative investments

16.

The role of artificial intelligence and big data in investment management

17.

The promise and challenges of machine learning in finance

18.

Data privacy and alternative data

19.

Digital ID and financial inclusion

20.

Strategic technology: Regulation and innovation of CBDCs

21.

Regulatory sandboxes: Innovation and financial inclusion

22.

Technology and sandbox development innovation in a transitional market: A case study

23.

Developing the regulatory ecosystem: The evolution of stablecoin

24.

Central bank digital currency, regtech and suptech

25.

Digital dollar: Cryptocurrency for everyday commerce

26.

CFTC regtech implications for virtual currency trading

27.

Fintech, regtech, suptech and central bank decision making

In early 2021, the Prudential Authority (PA) of South Africa signed a major long-term contract with a global leader in supervisory technology (suptech) and regulatory technology (regtech) solutions. This milestone cry-and-an best be described as the end of the beginning, a key moment of what has already been a long journey of transformation. This chapter tells the story of how the PA got to this position, sets out key objectives for its IT transformation, defines the key elements of the programme and looks ahead at its plans for the coming years.

BACKGROUND

The PA is the prudential regulator of the financial sector in South Africa. It was formerly established in 2018, although its genesis was years in the making. The PA was born out of a financial sector reform process that emanated from the 2007–08 global financial crisis. In 2011, the Ministry of Finance set out a reform agenda focused on ensuring a safer financial sector, one better able to serve the people of South Africa. A “twin peaks” methodology was proposed that called for the establishment of a prudential regulator for most parts of the financial sector and a dedicated market conduct regulator. The prudential

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