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, fintechs, and big tech 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, chat 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 the financial services industry becomes increasingly 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

Reading Deck

Customer Outcomes-Based Approach to Consumer Protection: A Guide to Measuring Outcomes

A customer outcomes-based approach to consumer protection focuses on the experiences and results of a customer’s access to and use of financial services, which are consequences of a financial service provider's (FSP) products, delivery, conduct, and practices.
Reading Deck

The Evolution of the Nature and Scale of DFS Consumer Risks: A Review of Evidence

While digital financial services have delivered substantial financial inclusion benefits and unlocked life-changing opportunities for consumers, CGAP’s latest research finds that they have exacerbated existing consumer risks and continue to introduce new and ever-evolving risks—some outgrowing consumer adoption rates.
Reading Deck

Digital Banks: How can they be regulated to deepen financial inclusion?

This reading deck describes three regulatory approaches used by policy-makers to regulate digital banks. It has a focus on harnessing the potential of digital banks to bring welcome competition and innovation to the banking sector and advance financial inclusion. It will help policy makers...

Latest Blogs

Blog

Growth of Digital Finance in Côte d’Ivoire is Not Without Risks

While digital financial services are driving financial inclusion in Côte d’Ivoire, we are also seeing the emergence of significant consumer risks that will require concerted action from all stakeholders in the digital finance ecosystem to counteract.
Blog

Consumer Advisory Panels: a Tool to Bridge the Regulator-Consumer Gap

How can FCP authorities bridge the regulator-consumer gap and ensure the financial marketplace is fair and balanced for all consumers? One promising solution is consumer advisory panels, which elevate the collective consumer voice.
Blog

When is Interoperability Right for Microfinance?

When is interoperability right for microfinance institutions? We draw on interviews with 40 small financial institutions to unpack the complex picture around a universal approach to ensuring all institutions benefit from real-time, digital payments.