Regulatory Sandboxes Not Always The Answer For Regulating Inclusive FinTech, Says New Report Commissioned By The UNSGSA - Publication Includes Early Lessons From Pioneering Regulators Who Have Used Innovation Offices, Sandboxes, And RegTech To Seize The Potential Of Fintech And Address Its Challenges

Regulatory sandboxes are neither necessary nor sufficient to promote financial inclusion, and similar results can be achieved through innovation offices and other tools, according to a new report <hyperlink> commissioned by Her Majesty Queen Màxima of the Netherlands, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA).

The report also emphasizes the potential for fintech to accelerate a dramatic rise in financial inclusion for the 1.7 billion people worldwide who do not have a bank account.

The report, Early Lessons on Regulatory Innovations to Enable Inclusive Fintech: Innovation Offices, Regulatory Sandboxes, and Regtech, was produced by the University of Cambridge’s Centre for Alternative Finance (CCAF) and the FinTech Working Group of the UNSGSA with support from the Monetary Authority of Singapore (MAS).

“This report comes at a key moment when fintech has given us an unprecedented opportunity to bring more people into the formal financial system,” said Queen Màxima. “While these innovative tools are exciting, countries need guidance on how to regulate them in a way that maximizes their potential and minimizes their risks.”

“The fintech phenomenon offers great opportunity to make finance more purposeful. Harnessed well, it will help to make financial services more accessible, more affordable, and more focused on the customer’s needs. Realising this potential requires close and continuous collaboration between the private and public sector. MAS is delighted to support UNSGSA and CCAF in producing this report, share our experiences, and learn from fellow regulators,” said Ravi Menon, Managing Director, MAS.

Regulators seeking to adopt regtech tools should start small with one or two test cases and build momentum from there, the report said, adding that capacity building inside regulatory authorities is also crucial. To succeed, regulators will need dedicated staff familiar with new technologies.

The UNSGSA FinTech Working Group is made up of members from Alliance for Financial Inclusion, Ant Financial, Bankable Frontier Association, Bill & Melinda Gates Foundation, Bangko Sentral ng Pilipinas, Better Than Cash Alliance, Consultative Group to Assist the Poor, International Finance Corporation, MAS, McKinsey, Omidyar Network, PayPal, Reserve Bank of India, and the World Bank. The Cambridge Centre for Alternative Finance led the writing, research, and production under the supervision and coordination of the Office of the UNSGSA.