A recent joint study from the Cambridge Centre for Alternative Finance (CCAF) at the University of Cambridge and World Bank found that the financial regulators are prioritising fintech business models to contribute to financial inclusion and boost local economies, particularly in Emerging Markets and Developing Economies (EMDEs).
The 3rd Global Fintech Regulator Survey gathered data from 128 global financial authorities in 106 jurisdictions, 70% of which were supervising fintechs in EMDEs.
The survey revealed that prioritisation of fintechs was most acute in Sub-Saharan Africa, where 75% of participants reported on focusing more on fintechs. 56% of respondents in EMDEs reported an increase of recognition for fintechs, compared to 35% those in advanced economies.
The report highlighted that financial inclusion efforts are being furthered by fintechs globally. The pandemic acted as a catalyst for financial regulators to place more emphasis on financial startups in order to support local economies.
However, financial authorities expressed anxiety about consumer risks, cybersecurity, and fraud in the digital assets sector, according to respondents. 78% reported that cybersecurity was their biggest concern moving into the future.
Jean Pesme, global director of finance, competition and innovation at The World Bank Group, commented: “At the World Bank, we see a growing demand from client countries for data-driven assessment tools of risk in financial services. In addition to seeking insights into the management of persistent and emerging risks, the survey has also explored how and where regulatory authorities are using different types of digital infrastructures to enhance regulatory and supervisory functions.”