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Impact of the digitalization of financial services on supervisory practices in the private pensions sector – IOPS – December 2018

14 March, 2019

This document reviews the most important digital technology applications for the private pension sector and concentrates on assessing the current and expected impact of digitalization and new technologies on pension supervision. The project also includes three country case studies: Hong Kong (China), Kenya and Mexico.

Three key areas related to the project’s main topic are analyzed: the main FinTech developments in the private pensions sector, some of them driven by the supervisors; existing and evolving supervisory approaches and practices for the most important FinTech developments in the private pensions sector; and the ways in which supervisors use innovative technologies to make supervision and communication with stakeholders more cost-effective and efficient. Compared to other segments of the financial sector, digital innovation in the private pensions area is still at an incipient stage and relates only to certain areas of the activities of pension service providers, as well as their interactions with the supervisors.

First, the supervisors aim to offer support and encourage financial innovation, by holding regular meetings, establishing innovation centers and/or regulatory safe spaces. Parallel to the above, they also intend to closely monitor developments and address any emerging risks related to the FinTech area for the financial sector and consumers. Cyber-attacks, theft of pension assets, violations of private information and fraud are considered the main areas requiring oversight.

Even at an early stage, technology-based solutions (SupTech) are considered important tools that could improve the quality and cost-effectiveness of supervision.

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