The Joint Financial Sector Regulators Forum concluded its 16th Annual Board Retreat in Naivasha, centering its discussions on “Fostering Financial Stability and Resilience Amid Emerging Risks and Regulatory Reforms.”
Held against the backdrop of rapid technological transformation in the financial industry, the retreat brought together key regulators to assess the evolving landscape shaped by innovations such as virtual assets, Artificial Intelligence (AI) Machine Learning and bundled financial products.
According to the Forum, while these innovations have improved access, efficiency, and customer experience, they also pose new risks to financial stability, regulation, and consumer protection. Participants agreed on the need for enhanced research and monitoring to better understand the impact of emerging financial products and ensure that innovation continues to support financial inclusion without undermining market stability.
A major concern highlighted during the retreat was the growing reliance on third-party technology service providers. The Forum warned that concentration risk where many institutions depend on a single provider could expose the financial system to widespread disruption in the event of a service failure. Mapping these dependencies and assessing systemic risk was therefore identified as a top priority.
The retreat also focused on the sector’s increasing use of AI and ML, which, while boosting efficiency, has created adaptation challenges for some providers and customers. The Forum agreed to develop a comprehensive strategy to guide the safe and effective integration of emerging technologies in Kenya’s financial sector.
Strengthening supervisory capacity in Anti-Money Laundering, Countering the Financing of Terrorism, and Counter Proliferation Financing (AML/CFT/CPF) also featured prominently.
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Regulators emphasized that enhanced tools and oversight are essential to maintain Kenya’s competitiveness as a secure business and investment hub.
With the marketplace evolving rapidly, the Forum underscored the need to reinforce consumer protection frameworks to safeguard users of new and complex financial products.
Finally, the regulators called for alignment of Kenya’s Crisis Management and Resolution Frameworks with international best practices.
Key recommendations included improving Emergency Liquidity Assistance mechanisms and ensuring adequate resolution funds to protect customers and maintain confidence in the financial system.
The Forum affirmed its commitment to continued collaboration in strengthening the stability, resilience, and integrity of Kenya’s financial sector.
The Joint Financial Sector Regulators Forum was established in 2009 to facilitate effective information sharing, foster alignment on key legal and policy matters and develop robust regulatory frameworks to ensure stability of the financial sector.
The 16th Retreat was attended by Board members and senior management teams from: the Capital Markets Authority (CMA), the Central Bank of Kenya (CBK), the Insurance Regulatory Authority (IRA), the Retirement Benefits Authority (RBA), the Sacco Societies Regulatory Authority (SASRA), the Kenya Deposit Insurance Corporation (KDIC), and the Policyholders Compensation Fund (PCF).
By Obegi Malack
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