Youth in rice farming, Philippines. Photo by Jayson Berto, 2016 CGAP Photo Contest Photo by Jayson Berto, 2016 CGAP Photo Contest

Policy

New technologies are rapidly changing the face of finance, breaking up financial services into smaller components digitally delivered by new players. Large retail chains, electronic money issuers and big technology and social media platforms such as WeChat, Apple Pay and Google are entering the financial arena, leveraging the vast amounts of data they harvest from consumers’ online purchases, text conversations or Facebook posts and combining them to deliver new financial services.

While these innovations offer great potential for expanding financial services to larger numbers of people especially the financially excluded, they raise new questions for policy making in an environment that was largely built for banks. Should the newcomers be regulated and supervised and by whom? What rules on market competition apply? How should data privacy be managed? Where is the balance between fostering innovation and protecting consumers? What risks are posed to market stability?

As financial services increasingly become modular, automated, disaggregated and transnational, CGAP believes that policy makers need a new approach. Successful financial inclusion requires a policy and regulatory framework that fosters responsible, inclusive financial systems and one that has the flexibility to adapt to rapid changes. Consumers must view the system as fair and stable, protecting their interests. Businesses must know there is a clear set of rules balancing innovation and stability while fostering appropriate competition and cooperation.

Latest Research

Publication

I-SIP Toolkit: Policy Making for an Inclusive Financial System

A how-to guide for financial sector policy makers on successfully managing the interplay among four core objectives – financial inclusion, stability, integrity and consumer protection.
Slide Deck

Module 5: Financial Capability

Latest Blogs

Blog

Global Financial Innovation Network: Not Global Yet

The rapidly evolving FinTech space has many regulators worried about their ability to keep pace. A new global network of regulators aims to offer practical guidance and promote cooperation in the space, but to succeed it will need a diverse membership.
Blog

How Regulators Can Foster More Responsible Digital Credit

Regulators can help ensure digital credit helps, rather than harms, poor customers by taking these steps.
Blog

4 Regulatory Enablers for Digital Finance: A Gender Perspective

Unless policies consider gender, we risk leaving behind the most vulnerable in society, particularly women, limiting our ability to achieve the SDGs. However, if implemented with gender in mind, the basic regulatory enablers of digital finance can increase women's financial inclusion.