The rise of digital technology has nurtured a growing industry around the world in financial services that benefit the poor, from mobile payments and money transfers to micro-savings and mobile-based crop insurance. But as the financial landscape evolves to include these disruptive innovations, new players and new business models could bring fresh risks to individual users and to financial systems. So how should policymakers respond?

 

A new, major report from the Center for Global Development, Financial Regulations for Improving Financial Inclusion sets out how regulators can make the goal of financial inclusion compatible with the traditional mandates of financial regulation: safeguarding the integrity and stability of the financial system, while also protecting consumers from fraud. The report advances specific recommendations on three key three key regulatory issues: What should a pro-inclusive competition policy be? How can regulations support leveling the playing field between providers? And how should know-your-customer rules be designed? Examples from a number of developing countries, including India support the report’s recommendations.