Cambridge Centre for Alternative Finance and World Bank – Study COVID Crisis and Impact on Fintech Regulation

Crowdfund Insider | JD Alois | Oct 28, 2020

aa - Cambridge Centre for Alternative Finance and World Bank – Study COVID Crisis and Impact on Fintech RegulationThe Cambridge Centre for Alternative Finance (CCAF), the leading research institute covering the global Fintech sector, has partnered with the World Bank on a study reviewing the impact of COVID-19 on Fintech and regulation.

As finance is one of the most regulated sectors of industry in the world, the ongoing COVID-19 health crisis has affected the pace of regulatory innovation. The CCAF/World Bank research tallied responses from 118 central banks and other financial regulatory authorities in 114 jurisdictions worldwide, revealing that the majority of these institutions have accelerated change recognizing the benefits of Fintech during a time of economic duress.

See: 5 Trends to Watch in Fintech Regulation

According to CCAF, 72% of respondents have either accelerated or introduced initiatives on digital transformation with 58% having either accelerated or introduced initiatives regarding Regtech/Suptech. Additionally, 56% of respondents did so in regard to Fintech innovation offices.

The Global COVID-19 FinTech Regulatory Rapid Assessment Study indicated that regulators in jurisdictions with higher Covid-19 requirements are more likely to have accelerated their regulatory sandbox initiatives (42%) compared to those in lower stringency jurisdictions (33%).

The report notes that Fintech innovation can play a “vital role in extending the reach and widening the access of financial services.” Government mandates requiring social distancing and lockdowns have accelerated the digital transformation of financial services.

See: Fintechs to play an “even more important” role coming out of lockdown, says British Business Bank

Fintech has already helped to bring access to financial services to millions of consumers and MSMEs (Micro, Small, and Medium Enterprises) around the world. COVID has dramatically impacted the global economy but Fintech can help alleviate some of these woes.

Philip Rowan, Lead in Regulatory Innovation at the CCAF, explained that COVID-19 has been catalytic in pushing Fintech up the agenda for regulators and is affecting regulatory approaches, practices, and processes:

“The increasing digitalization of financial services will require parallel innovation and transformation in financial regulation and supervision, encompassing not only technology but also changes in mindset and culture.”

Over half of the surveyed regulators in advanced economies said prioritization of Fintech has remained high. Central banks are more likely to have increased the efforts of their Fintech work relative to other financial regulators (65% among central banks vs 38% among other financial regulators).

See: Fintech Acquisitions Show Sector Strength Despite Covid-19

These regulatory changes are taking place as 60% of responding regulators have observed strong increases in the use, or offering, of many FinTech products and services since the outbreak of the pandemic.

Caroline Freund, Global Director of Trade, Investment and Competitiveness at World Bank Group, said the research was undertaken in order to better understand the experiences of regulators as they face the impact of COVID-19 and increased utilization of Fintech.

“The findings show that COVID-19 has in many cases accelerated policies and programs that support a shift to digital finance, such as innovation offices and regulatory sandboxes,” said Freund.

The study also highlights that regulators are taking actions as they see rising risks in the Fintech market during Covid-19 concerning cybersecurity (78% referencing as a top-three risk), operational risks (54%), consumer protection (27%), and fraud and scams (18%).

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The coronavirus has heightened the need for traditional financial services firms to focus more energy on innovation while early-stage Fintechs have stepped up to fill the gap in financial transaction needs

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View the Global COVID-19 FinTech Regulatory Rapid Assessment Study --> here

 

 


NCFA Jan 2018 resize - Cambridge Centre for Alternative Finance and World Bank – Study COVID Crisis and Impact on Fintech Regulation The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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