Getting Financial Inclusion Policies Right in the Digital Era : Focus on Competition and Innovation as Policy Objectives

The rapid digitization of finance, the fast pace of technology advancement and the rise of data-driven innovation has transformed financial sectors and created opportunities for financial authorities that are pursuing financial inclusion to adapt their regulatory and supervisory approaches. These innovations change market dynamics, creating new benefits and risks for financial stability, integrity, inclusion, innovation, consumer protection, and market competition. Policymakers and regulators should specifically assess these impacts when designing their policy or regulatory interventions and monitor each to evaluate the ongoing results of their work. Including a detailed and systematic assessment of competition and innovation impacts would allow supervisors and regulators to better understand and address these dimensions that are critical for the realization of their financial inclusion objectives since new policies, regulations, and changes in supervision can hamper innovation and distort competition dynamics. This is particularly important in emerging and developing countries, where innovation within a freely competitive environment can help leapfrog several stages of market development