Welcome to Module 4: Prudential Supervision
Note* This is a large module. It is delivered over two weeks. You will have two weeks to work through the material and complete the module’s quiz and assignment.
The first three modules of this course have laid the foundation for applying a risk-based approach to the supervision of digital financial services. You have learned about proportionality and why it is necessary for you and your organisation to become data-driven in your supervisory activities.
When applying a risk-based approach to supervision of DFS, supervisors need to cover two dimensions, namely:
- Prudential supervision
- Market conduct – or consumer protection – supervision
This module covers the prudential aspects of DFS supervision. Module 5 will cover market conduct, involving consumer protection and competition.
In Module 4, you will learn about the main prudential concerns in deposits, payments, credit, and insurance. You will also learn about developments in sustainable finance and innovative insurance, and how they could impact your work.
You will explore supervisory guidance on particularly important issues, such as anti-money laundering (AML/CFT) and virtual assets. You will also look at how new operational developments, such as cloud computing, introduce new operational risks for DFS providers. You will learn how you can apply your risk-based approach to appropriately supervise providers that rely on these new technologies.
The goal for this module is for you to implement a proportional and risk-based approach, selecting an appropriate combination of supervisory tools (including new and emerging tools), to address priority prudential risks that enable the development of inclusive DFS.
Topics
- This module will cover the following topics:
- Differentiate between prudential and market conduct supervision
- Incorporating gender perspectives in prudential supervision
- Prudential supervision for:
- Deposits and payments
- EMIs and protecting depositors
- Agents
- Credit
- Inclusive Insurance and Innovation
- Sustainable inclusive finance
- AML/CTF
- Virtual assets
- Cloud computing
- Data and cybersecurity-related risks
- Balancing integrity with financial exclusion risks
Outcomes
By the end of this module, you will be able to:
- Identify appropriate risk-based supervisory approaches and practices relevant to proportional prudential supervision for financial inclusion.
- Choose an adequate combination of supervisory tools to advance financial inclusion and other statutory goals via prudential supervision.
- Take timely and proportionate supervisory actions to address priority prudential risks and enable the development of inclusive DFS.
- Identify and prioritise emerging prudential supervisory issues from innovation in business models, products and services, and technologies.
- Adopt proportional and inclusion-aware supervision to indirectly support the development of appropriate, financially-inclusive solutions.