A welcome address and opening remarks by Francois Groepe,
Deputy Governor of the South African Reserve Bank,
at the Innovation and Cybersecurity Conference
Sandton Convention Centre, Johannesburg
28 August 2018
Good morning, Governor, fellow Deputy Governors, fellow regulators (in particular our
colleagues form National Treasury, the Financial Sector Conduct Authority and the
Financial Intelligence Centre), our colleagues from numerous neighbouring central
banks, distinguished guests, ladies and gentlemen.
The South African Reserve Bank (SARB) is pleased to welcome so many of you who
have decided to join us at this conference. We appreciate the great interest in this
event, both from domestic and from international stakeholders. We remain fully
committed to engaging and cooperating with all our stakeholders on crucial policy
matters and the changes in our shared landscape.
We hope that the next three days will offer great insights and will spark beneficial
conversations on the themes and topics of this conference.
Introduction
We are undoubtedly facing an epoch of unrivalled change that is far more exponential
than the Cambrian Explosion that Andrei Kirilenko will make reference to in his
presentation later today. This era offers many opportunities, and government agencies
in collaboration with business and the wider society can play a critical role in leveraging
these opportunities to the benefit of all humankind. In this regard, Frans van Houten is
"Government should seek more strategic approaches to develop
quoted as having said:
dynamic, resilient infrastructure. Business must be more creative in offering financing
solutions as partners with government, and people must support sustainable innovation
as a public policy priority."
Conferences such as these are part of a collaborative effort in our mission to deepen
our insights into and understanding of innovation and cybersecurity. We hope that you
too will benefit from these proceedings and will emerge from this conference with an
expanded knowledge on these critical issues that we will be covering over the next
three days.
The genesis of this conference dates back to 2016 when the SARB organised and
hosted its first Cybersecurity Conference. That conference underlined the importance of
cybersecurity and cyber-resilience. In 2017, the SARB hosted the first Payments
Innovation Conference in collaboration with domestic and international payments
stakeholders. This Payments Innovation Conference sought to develop more profound
insights into the innovations emerging in the payments ecosystem, while facilitating a
better understanding of the role of innovation and regulatory frameworks in the
payments industry.
However, we cannot engage in conversations about the remarkable amount of
innovation taking place in the financial services industry without addressing the
cyber-threats that we also face. It was therefore prudent for the SARB to, this time,
merge the two conferences into one.
This Innovation and Cybersecurity Conference will focus on the following five themes:

Emerging innovations

Leveraging new technologies
 -
Innovation and the regulator challenges and opportunities

Cybersecurity trends
 -
The South African journey getting to harmonisation and action
I will now make some brief introductory remarks before handing over to the Governor of
the SARB, Mr Lesetja Kganyago, to deliver the opening address on 'Disruptive
South African Reserve Bank's perspective and
innovation and cybersecurity: the
response'.
Innovation
It is becoming evident that the ever-accelerating pace of emerging technological
innovation, notwithstanding all its advantages, is disruptive to the financial services
being offered by financial institutions, and it also poses some challenges for regulators.
Innovation introduces new players to the financial services industry and enables
incumbent industry participants to expand the scope of their financial offerings.
Innovation generally leads to the expansion of markets and greater efficiencies, and
could potentially result in lower costs for the end user of financial products and/or
services. Regulators taking positions to enable innovation and competition stand to
benefit, among others, consumers.
PricewaterhouseCoopers'
In (PwC) 21st Chief Executive Officer (CEO) Survey1, both
cyber-threats and the speed of technological change make it into the top six anxieties
that keep CEOs awake at night. Through this Innovation and Cybersecurity Conference,
we will, for example, explore, in a round table discussion with industry leaders
moderated by Governor Kganyago, 'how exponential technology will drive change in
the current financial sector landscape'. This topic is particularly relevant because
exponential technology has the ability to threaten the survival of firms that are highly
successful today, even if they spend large amounts on innovation initiatives. It was
"Innovation has nothing to do with how many R&D dollars you
Steve Jobs who said:
have. When Apple came up with the Mac, IBM was spending at least 100 times more
you have, how you're
on R&D. It is not about money. It's about the people led, and how
much you get it!"
Financial institutions must keep pace with what is happening in the technological
sphere if they are to remain relevant and are to survive. Environmental forces such as
innovation invariably create both threats and opportunities for all the role players, no
adage that says: "Adapt quickly to
less so than in the financial industry. There is an
change or perish seamlessly without change in the 21st century."
1
See PwC's 21st CEO Survey, The anxious optimist in the corner office, available at
https://www.pwc.com/gx/en/ceo-survey/2018/pwc-ceo-survey-report-2018.pdf.
Cybersecurity
As financial institutions and infrastructure service providers evolve to keep up with the
pace of technological change such as application programming interfaces, distributed
ledger technologies, artificial intelligence and cloud-computing, just to mention a few,
sophisticated cybercriminals continue to target banking and payment systems, with the
potential to disrupt their operations and potentially cause harm to the broader financial
system and even the entire economy. But it is not only technological progress and
innovation that increase cyber-risk; cyber-threats may also undermine innovation. It
"The diverse threats we face
was James Comey, the former FBI2 Director, who said:
Much of America's most sensitive data is stored on
are increasingly cyber-based.
computers. We are losing data, money, and ideas through cyber-intrusions. This
threatens innovation."
It is thus essential that these kinds of risks are well understood and that all financial
institutions and market infrastructures are secured against cyberattacks. The financial
services industry should strive to have cybersecurity practices in place that are agile
and responsive to emerging cyberspace activities and developments.
Through this Innovation and Cybersecurity Conference, we will learn more about the
emerging types of cyber-threats and cyberattacks facing the financial ecosystem. We
will discuss the risk management practices, controls and defence mechanisms that the
financial sector should adopt to deal with these cyber-threats and cyberattacks.
This conference is also a platform to collaborate on cyber-resilience through national
and industry-specific cyber-response structures in the interest of financial stability and
financial security in South Africa.
Closure
Allow me to extend a special word of thanks to speakers and panellists, both local and
those from abroad, who have agreed to participate in this conference and to share their
insights and experience with us.
2
Federal Bureau of Investigation (United States)
I hope that the focus of the next three days will be on coordinating efforts, establishing
response structures, and creating regulatory certainty in this disruptive environment
where innovation and cybersecurity converge.
Thank you.