The National Bank of Georgia’s fintech unit is relatively new, only a year old. But when the Covid-19 pandemic struck, its data scientists used the crisis as an opportunity to leverage new data tools.
Speaking as part of Central Banking’s latest Tech Talk podcast episode, Otar Gorgodze – head of the financial and supervisory technologies development department – speaks about the central bank’s new Covid-19 dashboard.
“The models we have used help to forecast how the virus spread,” he says. “We have used some of the inputs to help us to make decisions around when employees should return to work, and the opening hours of the central bank.”
Georgia’s fintech market is still maturing but the country has quickly become a hub, especially for crypto-assets. Currently, 80% of global bitcoin mining is undertaken in four countries: China, Georgia, Sweden and the US.
In terms of impact on the domestic economy, Georgia stands out, as its share in the global mining stands at around 15%. According to the IMF, at the market price of bitcoins as of August 2018, mining companies in Georgia are receiving an estimated amount of $700 million annually, a significant share of the country’s $17.6 billion GDP in 2018.
In general, fintech startups tend to work with domestic banks, Otar explains. However, the central bank realised some unregulated fintech providers were contributing to the over-indebtedness of low-income households.
The National Bank of Georgia responded by altering its approach to regulating these entities, expanding the scope of existing regulation while asking firms to contribute to the formation of new rules.
“Once we have started to expand regulatory scope it became obvious that approach here should be very different from traditional financial institutions and large weight should be given to transparency of technological risks,” Otar says.
The central bank has taken what it calls an “open regulation” approach – this means the regulation is adaptive and market participants are actively involved in new regulatory developments. Currently, fintech regulation is conducted by the central bank’s financial innovation office.
New technology is also being embraced within the national bank. New chat-bots have been deployed and the central bank is also looking to see whether any of its current regulation can be made machine readable.
“We are also in the process of implementing a new instant payments system, which should have major impact on fintech companies’ engagement,” says Otar.
01:05 Covid-19 data dashboard
04:59 Modelling the virus
06:10 Building a new fintech unit
11:17 Open regulation
20:32 Benefits of sandboxes
27:05 Fostering API innovation
32:15 New instant payment system
To hear the full podcast, listen in the player above, or download. Future podcasts in our CB On Air: Fed Speak series will be uploaded to centralbanking.com. CB On Air is also available via iTunes or podcast apps and from Google Podcasts (Android only).