Covid-19 has led to a strong increase in the use of fintech products and services, prompting central banks and other financial authorities to step up their own regulatory innovation efforts, according to a report from the World Bank and the Cambridge Centre For Alternative Finance (CCAF).
The study, which gathered responses from 118 central banks and other financial regulatory authorities in 114 jurisdictions worldwide, shows strong fintech take-up since the outbreak of the pandemic.
In particular, 60% of respondents report an increase in the use of digital payments and remittances, while 22% are seeing more use of digital banks and 19% an uptick in digital savings or deposits.
Respondents in jurisdictions with more stringent Covid-19 containment and closure measures are more likely to have reported an increase in digital payments and remittances services. Emerging and developing economies (EMDEs) are seeing greater use of digital payments and banks.
Regulators are responding in kind: 72% have either accelerated or introduced initiatives on digital infrastructure, 58% have either accelerated or introduced initiatives regarding RegTech or supervisory tech, and 56% did so in regard to innovation offices.
No surveyed regulators report the cancellation of an innovation initiative due to Covid-19, although around 20% say they have had delays.
At the same time, the priority of fintech for regulators has either increased, or remained high, in light of Covid-19. In EMDEs, almost two-thirds of regulators say it has increased in priority. Over half of regulators in advanced economies say it has remained high.
More than a third of those surveyed have taken at least one regulatory measure specifically targeting the fintech sector. These include waiving transaction fees and raising transaction thresholds for digital payments.
Among the big risks to the fintech sector that regulators are taking action to deal with during the pandemic are cybersecurity, consumer protection and dealing with fraud and scams.
Philip Rowan, lead, regulatory innovation, CCAF, says: "Covid-19 has been catalytic in pushing fintech up the agenda for regulators and is affecting regulatory approaches, practices and processes.
"The increasing digitalisation of financial services will require parallel innovation and transformation in financial regulation and supervision, encompassing not only technology but also changes in mindset and culture."
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