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

Infographic

How to Make Data Work for the Poor

It's time for new approaches to data protection and privacy. This infographic showcases CGAP's solution in a visual format.
Publication

Making Data Work for the Poor

The consumer consent model for data privacy and protection is broken. It’s time for a new data paradigm whereby financial services providers and data collectors take greater responsibility for protecting customers’ data.
Publication

Nonbank E-Money Issuers vs. Payments Banks: How Do They Compare?

A special licensing category for nonbank e-money issuers is considered a key regulatory enabler for inclusive digital financial services. This Technical Note compares the EMI license with the payments bank license that India, Mexico and Nigeria have created.

Latest Blogs

Blog

How Can Licensing Regimes Keep Up with Financial Innovation in 2020?

Tech giants, digital banks, e-money issuers, fintech startups — as more diverse players enter the financial services space, they are becoming harder for regulators to classify and license. Here are four ways regulators can respond in 2020 and beyond.
Blog

Risk-Based Supervision Is Key to Financial Inclusion in 2020 & Beyond

In developing countries around the world, inadequate supervision risks neutralizing regulatory reforms designed to spark innovation and advance financial inclusion. Here’s what the global development community can do about it.
Blog

Digital Finance: Cybersecurity Requires Deeper Industry Collaboration

Cybercrime poses a significant threat to financial inclusion. Here are two things mobile financial services providers and industry associations must do to make financial services safer and more trustworthy for low-income customers.