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

Digital Financial Services for Financial Inclusion: Tools for Supervisors

This technical guide provides supervisors with tools and practical guidance on supervision of digital financial services (DFS).
Publication

Climate Risk and Financial Inclusion: A Regulatory Perspective

Climate change risks may drive the financial sector away from serving the least profitable and most climate-exposed clients, namely low-income, rural households, and micro, small, and medium enterprises. This new working paper outlines how inclusive green finance policies can help reduce these risks, creating a more stable and resilient real economy.
Reading Deck

Social Media Monitoring to Assess Consumer Risks in Digital Credit Apps: Guidance for Supervisors from an India Pilot

To better understand the digital consumer credit and the risks they pose for customers, this reading deck contains supervisory guidance on the use of a branch of AI, Natural Language Processing (NLP), for social media monitoring. It is based on insights and lessons from an India pilot and provides examples of social media analyses carried out as part of that pilot.

Latest Blogs

Blog

Consumer & Data Protection: A New Approach to Intersecting Risks

Consumer and data protection risks have historically been treated as separate concerns. Instead, all authorities involved with consumer data protection should work together to regulate in a way that ensures the responsible use of consumer data.
Blog

Stakeholder Landscaping: A Tool for Improved Consumer Engagement

Mapping the stakeholder landscape can be a useful tool to assist market conduct authorities in designing various aspects of a consumer advisory panel, ensuring they make sound strategic decisions about whom to involve and how best to do so.
Blog

How Are Climate, Financial Inclusion & Financial Stability Linked?

As financial authorities across the world develop plans to respond to the changing climate, they have opportunities to create a positive feedback loop of expanded financial inclusion and reduced climate risk.