The Central Bank has launched a new effort to assist fintech startups

The Central Bank of Cyprus (CBC) announced the establishment of a new Innovation Hub in the field of financial technology (fintech) on Tuesday, with the goal of encouraging and supporting domestic financial innovation.

The central bank stated that the Innovation Hub aspires to be an official communication platform between supervisory and regulatory authorities and businesses or startups active in the financial technology sector, where their operations combine innovative technological elements with financial services.

Furthermore, the release stressed that any interested parties' admission to the Innovation Hub will be based on defined objective criteria.

The CBC will provide non-binding advise to requests, including information and direction on the steps necessary to licence innovative fintech products or services.

According to the CBC, this allows the central bank to engage in a continuous and fruitful interaction with financial service providers in order to implement creative ideas and embrace new technology, allowing them to stay on top of any regulatory duties within the Cypriot financial system.

"The new Innovation Hub will contribute to the cultivation of a dynamic environment for the development of innovative companies and technologies, as well as monitoring and encouraging initiatives based on financial technology development, with the goal of ensuring the safe and smooth operation of the financial sector," the central bank explained.

Furthermore, the bank stated that the operation of the Innovation Hub will increase the central bank's understanding for proactive regulation and prudential supervision of emerging innovative financial operations.

It will also allow the CBC to quickly identify any dangers that may damage companies or the country's financial system.

"The domestic economy is entering an environment where technology enables the implementation of creative business models and services," said CBC governor Constantinos Herodotou, emphasising that any change can open up new frontiers of possibility for a company.

However, Herodotou cautioned that new outlets and channels might expose firms to new hazards, which must be properly countered with the appropriate and most up-to-date expertise.

According to Herodotou, by maintaining an open channel of communication and feedback with the rapidly growing fintech industry, the central bank seeks and looks forward to better protecting the financial system through the understanding of new risks, as well as the full utilisation of the various benefits resulting from such activities.

By fLEXI tEAM