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Fintech firms warned on customer funds

The Central Bank’s deputy governor Sharon Donnery has said that changes to the financial system brought about by technology will not change its “supervisory fundamentals”. 

She was speaking at the Fintech Ireland Summit 2024 in Dublin yesterday (28 November). 

Donnery told the event that protecting consumers and the system – through good governance, risk management, and resilience – would “always remain key”, adding that it was firms’ responsibility to manage the risks that evolved. 

“While we recognise the benefits of innovation – and that it is in the public interest for the financial sector to innovate – it is also our job to make sure risks are being well-managed,” she stated.

‘Basic obligations’ 

Donnery warned the event that the Central Bank had “no tolerance” for weaknesses in safeguarding arrangements – how companies protect customers’ funds. 

“That it is a fundamental responsibility to safeguard the funds you have been entrusted with should go without saying – and is precisely what your customers assume and expect. 

“But unfortunately, it does have to be said, with our supervisory experience pointing to continued instances of firms failing to comply with basic statutory obligations around protecting users’ money,” Donnery said. 

‘Sandbox’ applications 

She also revealed that the Central Bank had received 38 applications for its regulatory ‘sandbox’ programme, which is aimed at encouraging the development of innovative projects in the financial sector. 

The applications are from Ireland, the rest of the EU, and Britain, and represent “a wide variety” of firms, according to Donnery. 

Regulatory sandboxes allow firms to test innovative products in the market within a framework that is approved by the sector’s regulator. 

She said that selected participants would be announced in the coming weeks.