Regulation and Supervision of Fintech : Considerations for EMDE Policymakers

Fintech is transforming the global financial landscape. It is creating new opportunities to advance financial inclusion and development in Emerging Markets and Developing Economies (EMDEs), but also presents risks that require updated supervision p...

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Main Author:	World Bank
Format:	Technical Note
Language:	English
Published:	Washington, DC 2022
Subjects:	FINANCIAL SECTOR INNOVATION EMERGING MARKETS AND DEVELOPING ECONOMIES (EMDES) FINTECH FINANCIAL INCLUSION FINANCIAL SUPERVISION POLICY FINANCIAL DATA INNOVATION DATA SECURITY RISK CLOUD COMPUTING SECURITY REGULATION OF FINTECH DATA PRIVACY RISK IMF-WORLD BANK BALI FINTECH AGENDA (BFA) FINTECH FAILURE IT SECURITY CRYPTOCURRENCY
Online Access:	http://documents.worldbank.org/curated/en/099735204212215248/P173006033b45702d09522066cbc8338dcb http://hdl.handle.net/10986/37345

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spelling	okr-10986-373452022-04-28T05:10:37Z Regulation and Supervision of Fintech : Considerations for EMDE Policymakers World Bank FINANCIAL SECTOR INNOVATION EMERGING MARKETS AND DEVELOPING ECONOMIES (EMDES) FINTECH FINANCIAL INCLUSION FINANCIAL SUPERVISION POLICY FINANCIAL DATA INNOVATION DATA SECURITY RISK CLOUD COMPUTING SECURITY REGULATION OF FINTECH DATA PRIVACY RISK IMF-WORLD BANK BALI FINTECH AGENDA (BFA) FINTECH FAILURE IT SECURITY CRYPTOCURRENCY Fintech is transforming the global financial landscape. It is creating new opportunities to advance financial inclusion and development in Emerging Markets and Developing Economies (EMDEs), but also presents risks that require updated supervision policy frameworks. Fintech encompasses new financial digital products and services enabled by new technologies and policies. Although technology has long played a key role in finance, recent fintech developments are generating disruptive innovation in data collection, processing, and analytics. They are helping to introduce new relationship models and distribution channels that challenge traditional ways of finance, while creating additional risks. While most of these risks are not new, their effects and the way they materialize and spread across the system are not yet fully understood, posing new challenges to regulators and supervisors. For example, operational risk, especially cyber risk, is amplified as increasing numbers of customers access the financial network on a 24 by 7 basis. Likewise, increased reliance by financial firms on third parties for provision of digital services, such as cloud computing, may lead to new forms of systemic risks and concentration on new dominant unregulated players such as big tech firms. This note aims to provide EMDE regulators and supervisors with high-level guidance on how to approach the regulating and supervising of fintech, and more specific advice on a few topics. Preserving the stability, safety, and integrity of the financial system requires increased attention to competition and ensuring a level playing field and to emerging data privacy risks. As a general principle, policy response should be proportionate to risks posed by the fintech activity and its provider. While striking the right balance can be challenging in the absence of global standards, the IMF-World Bank Bali Fintech Agenda (BFA), along with guidance by Standard Setting Bodies, provides a good framework for reference. 2022-04-27T15:51:36Z 2022-04-27T15:51:36Z 2022 Technical Note http://documents.worldbank.org/curated/en/099735204212215248/P173006033b45702d09522066cbc8338dcb http://hdl.handle.net/10986/37345 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC Report Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	FINANCIAL SECTOR INNOVATION EMERGING MARKETS AND DEVELOPING ECONOMIES (EMDES) FINTECH FINANCIAL INCLUSION FINANCIAL SUPERVISION POLICY FINANCIAL DATA INNOVATION DATA SECURITY RISK CLOUD COMPUTING SECURITY REGULATION OF FINTECH DATA PRIVACY RISK IMF-WORLD BANK BALI FINTECH AGENDA (BFA) FINTECH FAILURE IT SECURITY CRYPTOCURRENCY
spellingShingle	FINANCIAL SECTOR INNOVATION EMERGING MARKETS AND DEVELOPING ECONOMIES (EMDES) FINTECH FINANCIAL INCLUSION FINANCIAL SUPERVISION POLICY FINANCIAL DATA INNOVATION DATA SECURITY RISK CLOUD COMPUTING SECURITY REGULATION OF FINTECH DATA PRIVACY RISK IMF-WORLD BANK BALI FINTECH AGENDA (BFA) FINTECH FAILURE IT SECURITY CRYPTOCURRENCY World Bank Regulation and Supervision of Fintech : Considerations for EMDE Policymakers
description	Fintech is transforming the global financial landscape. It is creating new opportunities to advance financial inclusion and development in Emerging Markets and Developing Economies (EMDEs), but also presents risks that require updated supervision policy frameworks. Fintech encompasses new financial digital products and services enabled by new technologies and policies. Although technology has long played a key role in finance, recent fintech developments are generating disruptive innovation in data collection, processing, and analytics. They are helping to introduce new relationship models and distribution channels that challenge traditional ways of finance, while creating additional risks. While most of these risks are not new, their effects and the way they materialize and spread across the system are not yet fully understood, posing new challenges to regulators and supervisors. For example, operational risk, especially cyber risk, is amplified as increasing numbers of customers access the financial network on a 24 by 7 basis. Likewise, increased reliance by financial firms on third parties for provision of digital services, such as cloud computing, may lead to new forms of systemic risks and concentration on new dominant unregulated players such as big tech firms. This note aims to provide EMDE regulators and supervisors with high-level guidance on how to approach the regulating and supervising of fintech, and more specific advice on a few topics. Preserving the stability, safety, and integrity of the financial system requires increased attention to competition and ensuring a level playing field and to emerging data privacy risks. As a general principle, policy response should be proportionate to risks posed by the fintech activity and its provider. While striking the right balance can be challenging in the absence of global standards, the IMF-World Bank Bali Fintech Agenda (BFA), along with guidance by Standard Setting Bodies, provides a good framework for reference.
format	Technical Note
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	Regulation and Supervision of Fintech : Considerations for EMDE Policymakers
title_short	Regulation and Supervision of Fintech : Considerations for EMDE Policymakers
title_full	Regulation and Supervision of Fintech : Considerations for EMDE Policymakers
title_fullStr	Regulation and Supervision of Fintech : Considerations for EMDE Policymakers
title_full_unstemmed	Regulation and Supervision of Fintech : Considerations for EMDE Policymakers
title_sort	regulation and supervision of fintech : considerations for emde policymakers
publisher	Washington, DC
publishDate	2022
url	http://documents.worldbank.org/curated/en/099735204212215248/P173006033b45702d09522066cbc8338dcb http://hdl.handle.net/10986/37345
_version_	1764486987569430528

Regulation and Supervision of Fintech : Considerations for EMDE Policymakers

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