TOKYO -- Japan's Financial Services Agency will increase oversight of how domestic institutions use information technology, looking to identify regulatory concerns even as it promotes innovation in financial technology.
Starting in July, the watchdog agency's inspections of banks and other institutions will include a checklist examining areas such as executive understanding of the importance of information technology and the establishment of proper IT systems management.
The agency also will add IT governance to its monitoring program. Cryptocurrency activities will face added scrutiny as well.
With fintech breaking down barriers to entry into finance, the FSA seeks a more flexible legal framework for financial regulation. The agency envisions shifting from regulations based on rigid institutional categories such as banks and brokerages to a framework defined by functions like payments and lending. Such a change would ensure that banks can compete on a level playing field with newcomers like tech companies that skirt existing regulatory oversight.