Policy Framework on Developing a National FinTech Strategy: An Ecosystem Approach to Inclusive FinTech, Digital Economy, Financial Inclusion and the Sustainable Development Goals

Posted: 2 May 2024

See all articles by Douglas W. Arner

Douglas W. Arner

The University of Hong Kong; The University of Hong Kong - Faculty of Law

Ross P. Buckley

University of New South Wales (UNSW) - UNSW Law & Justice

Dirk A. Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance; European Banking Institute

Kuzi Charamba

University of Hong Kong

Date Written: November 2023

Abstract

The Digital Financial Services Working Group (DFSWG) of the Alliance for Financial Inclusion (AFI) has been facilitating thought leadership and guidance on how the network can understand and support digital financial services (DFS), financial technology (FinTech), regulatory technology (RegTech), supervisory technology (SupTech), and other digital innovations to accelerate financial inclusion. This report takes these together under the broad heading of “FinTech”.

FinTech is widely and increasingly acknowledged as a critical enabler of and support for sustainable development and, more specifically, the United Nations Sustainable Development Goals (UN SDGs). This is particularly the case as economic, social, and financial activities are increasingly digitalized. The COVID-19 pandemic dramatically accelerated this process as communications, commerce, supply chains, and finance have been reoriented to be digital-first out of necessity, reinforcing and accelerating pre-existing trends.

This reorientation offers new means for financially excluded individuals and organizations to gain access to financial services and capital and to participate within economies in ways that they previously did not, thus driving stronger economic growth and supporting broad sustainable development. For example, FinTech-driven financial inclusion efforts can provide new means and ways for micro-, small-, and medium-sized enterprises (MSMEs) to gain access to finance through crowdfunding platforms; for governments to digitize social transfers and payments; and for members of the diaspora to make international remittances to unbanked friends and families’ e-money wallets. Yet, such economic and technological innovation also carries risks which can negatively impact markets, consumers, and societies more broadly. A small sample includes risks to cybersecurity, data privacy, and financial market integrity.

Maximizing the benefits while mitigating and minimizing the negative impacts of FinTech, therefore, will require smart approaches to the development of regulation and governance. The role of policymakers, central banks, and regulators in developing and implementing strategies to maximize the benefits of digitalization and digital finance for financial inclusion and the SDGs while minimizing risks is pivotal. This will require a deliberate, coordinated, and collaborative approach,manifested through the development of national FinTech strategies.

Keywords: FinTech, Digital finance, Sustainable Development Goals, Financial inclusion, digital public goods, digital financial infrastructure

Suggested Citation

Arner, Douglas W. and Buckley, Ross P. and Zetzsche, Dirk Andreas and Charamba, Kuzi, Policy Framework on Developing a National FinTech Strategy: An Ecosystem Approach to Inclusive FinTech, Digital Economy, Financial Inclusion and the Sustainable Development Goals (November 2023). Available at SSRN: https://ssrn.com/abstract=4807054

Douglas W. Arner (Contact Author)

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01237

Ross P. Buckley

University of New South Wales (UNSW) - UNSW Law & Justice ( email )

Sydney, New South Wales 2052
Australia

Dirk Andreas Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

Luxembourg, L-1511
Luxembourg

HOME PAGE: http://wwwen.uni.lu/recherche/fdef/research_unit_in_law/equipe/dirk_andreas_zetzsche

European Banking Institute ( email )

Frankfurt
Germany

Kuzi Charamba

University of Hong Kong ( email )

Faculty of Law, Pokfulam Road
Pokfulam
Hong Kong
Hong Kong

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