GOING BEYOND REGULATORY SANDBOXES TO ENABLE FINTECH INNOVATION IN EMERGING MARKETS

Although technological solutions promise access to cheaper and safer financial services, creating regulation that enables innovation in the fintech industry remains a challenge. Regulators must protect the public interest while still providing an environment conducive to product and partnership innovation. In response, many financial authorities are introducing regulatory sandboxes to simultaneously give providers the opportunity to test their innovations while also giving regulators time to learn about the risks of the products. However, as our experience with mobile money demonstrates, sandboxes do not go far enough to create a truly enabling environment for fintech innovation. To do so public- sector stakeholders need to address broad business barriers and consider the entire package of incentives faced by fintech firms and investors. The authors provide a nine-item list of reforms beyond sandboxes for governments to consider in order to create a holistic and multi-dimensional ecosystem for fintech innovation.