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

Enabling and Responsible Financial 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

Publication

Responsible Digital Finance Ecosystem (RDFE): A Conceptual Framework

This framework builds on global and country knowledge to help financial sector authorities and key ecosystem actors strengthen financial consumer protection in the digital era through a holistic ecosystem approach.
Publication

Financial Inclusion and Disruptive Innovation: Regulatory Implications

This working paper explores the latest wave of disruptive financial services innovations to better understand the regulatory changes that allow EMDEs to harness their financial inclusion potential while containing consumer and financial sector risk.
Publication

8 Billion Reasons: Inclusive Finance as a Catalyst for Climate Action

We cannot tackle climate change effectively without inclusive financial services. CGAP outlines five areas for collaborative action between stakeholders working on climate change and those working on inclusive finance in order to leverage inclusive finance to scale grassroots climate action.

Latest Blogs

Blog

When Does Financial Education Work Best? Evidence-Based Insights

CGAP’s Impact Pathfinder consistently identified financial education as a factor for the uptake and use of financial services, prompting us to ask: Could it be playing a more central role in what works, for whom, and in what circumstances?
Blog

RDFE Lessons From the UK's Open Banking Journey

The UK’s open banking approach demonstrates how digital finance can be harnessed responsibly to promote innovation and competition while safeguarding consumers and their data, aligning well with CGAP’s Responsible Digital Finance Ecosystem framework.
Blog

AI and Responsible Finance: A Double-Edged Sword

Artificial Intelligence can transform financial inclusion and digital financial services, but it can also increase consumer risks like fraud, data misuse, and lack of transparency.