Building Consumer Demand for Digital Financial Services – The New Regulatory Frontier
33 Pages Posted: 25 Aug 2014 Last revised: 19 Jul 2015
Date Written: August 25, 2014
Digital Financial Services (DFS) are held out as key financial solutions for improving financial inclusion. However, targeted end-users often offer little in the way of obvious profitable opportunities and so market forces alone are not enough to ensure the services provided match end-users means, needs or wants. As a result DFS in emerging markets may suffer from limited uptake and usage, with consequently little effect on financial inclusion. In emerging markets, financial regulators have been focusing on supporting the success of DFS through largely institutional and regulatory framework efforts. This paper argues that financial regulators must first work to understand and build consumer demand for DFS. This requires a change in mind-set for financial regulators who are more familiar with promoting financial stability, safety and efficiency. In this paper we explore this changing role for financial regulators. We recommend that regulators particularly focus on promoting partnerships in DFS as a means of promoting financial inclusion.
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