by Gabriel Rizza Ferraz
The World Bank and the Cambridge Centre for Alternative Finance have published a joint assessment study analyzing the impacts of COVID-19 on the regulation of FinTech. The researchers conducted a survey with 118 central banks and financial regulators from 114 jurisdictions. The study was designed primarily through a series of semi-structured interviews and questionnaire-based responses.
The researchers start by analyzing the impacts on FinTech market developments and regulatory challenges. The discussion is centered on the impact of COVID-19 in the provision of financial services, how FinTechs were prioritized and regulator’s organizational preparedness and resilience.
The study proceeds to discuss the COVID-19 regulatory response and how different measures affect digital financial services providers, especially those related to anti-money laundering, economic relief, cybersecurity, and a more digital approach to regulation. The authors map the regulatory benchmark patterns.
The last chapter of the assessment measures the impact of COVID-19 on Regulatory Innovation Initiatives analyzing the effects on innovation offices, regulatory sandboxes, RegTech and digital infrastructure initiatives.
The short-term considerations of the assessment indicate that many regulators experimented with nimble regulatory measures to tackle the Covid-10 pandemic. They also show that the crisis facilitated the engagement and knowledge transfer between the financial regulators and the industry. The regulators also accelerated their support for innovative initiatives.
The longer-term considerations show that developing solutions to supervise firms remotely with the use of RegTech is of strategic importance for regulators. Supporting the transition to the digital infrastructure is another key initiative for regulators to implement. Finally, regulators should consider the wider implications of digitalization of financial services, such as competition, exclusion and financial literacy.
About the Author
Gabriel Rizza Ferraz is Policy Analyst at the Brazilian Micro and Small Business Support Service