According to a statement by the CIFR, its research suggests digital financial services could improve “financial inclusion” but that the services required greater participation from the public.
Professor Ross Buckley of the University of New South Wales, who spearheaded the project, said financial regulators “must work to minimise the gap between the services being provided by the market and what end-users need, want and can afford”.
“Without more emphasis on building consumer demand, these services could suffer from limited uptake – leaving us with sophisticated frameworks for regulating digital financial services but little to actually regulate,” Professor Buckley said.
He cited several examples of possible governmental initiatives, including requiring payments to be made via electronic channels, improving financial literacy and driving the development of “open, interoperable and interconnected systems”.
Professor Buckley also encouraged greater co-operation between players in digital financial services, including payment providers, banks, microfinance institutions and mobile network operators.
“Collaboration between these players can strengthen the products and services available and, in turn, strengthen financial systems more broadly,” he said.
“Regulators will have a role here in assessing and approving partnerships amongst regulated entities and also identifying and mitigating any associated risks.”
Professor Buckley said such efforts by regulators would result in greater “financial inclusion”.
“While this represents a new regulatory frontier for financial regulators, it is a frontier well worth navigating in order to ensure the unbanked and under-banked benefit as much as possible from the abundance of innovative digital financial services available today,” he said.
