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1、With the support of:3rdTheGlobal Fintech Regulator SurveyPlease cite this study as:World Bank and CCAF(2022)The 3rd Global Fintech Regulator Survey,World Bank Group and the University of Cambridge3rdTheGlobal Fintech Regulator Survey3Table of contentsForewords.4Research team.7Acronyms.8Glossary.9Exe
2、cutive summary.111.Introduction and research motivation.152.Survey methodology and sample.182.1 Surveyadministrationandfieldwork.182.2 Samplebygeographyandincomeclassification.193.Medium-term impact of Covid-19.223.1 TheprioritizationoffintechduetoCovid-19.223.2 Fintech,perceivedrisks,andregulatoryo
3、bjectivesinlightofCovid-19.253.3 ChallengesduetotheimpactofCovid-19.283.4 TheimpactofCovid-19onregulatoryinnovationinitiatives.294.Consumer risk and protection.324.1 Regulatorymandateforfinancialconsumerprotection.334.2 Covid-19andconsumerrisks.344.3 Emergingconsumerrisksrelatedtofintech/DFS.354.4 G
4、enerallevelofconsumerrisksacrossfintechverticals.364.4.1 Severityofconsumerrisksindigitalassets/cryptocurrencies.374.4.2 Severity of consumer risks in digital payments and international remittances.394.4.3 Severity of consumer risks in digital lending.404.4.4 Severityofconsumerrisksinequitycrowdfund
5、inganddigitalcapitalraising.414.5 Identifying,measuring,andprioritizingfintech-relatedconsumerrisks.414.6 Challenges in identifying,measuring,and prioritizing consumer risks.424.7 Challengesinaddressingfintech-relatedconsumerrisks.434.8 Responsestofintech-relatedconsumerrisks.445.The landscape of di
6、gital regulatory and supervisory infrastructure.475.1 Proposedconceptualframeworkofdigitalregulatoryandsupervisoryinfrastructure.485.2 ThedataandapplicationlayersofDRSI.495.3 TheregulatoryandsupervisoryactivitylayerofDRSI.515.4 ThesectorallayerofDRSI.525.5 ChallengesindevelopingDRSI.556.Supervisory
7、technology mapping.586.1 Mapping suptech initiatives.586.2 Outcomes supported by suptech initiatives.606.3 Challenges in developing suptech initiatives.617.Policy implications and areas for future research.64Bibliography.68Appendix 1:List of survey respondents by jurisdiction.75The 3rd Global Fintec
8、h Regulator Survey4Innovationhastransformedfinancialservices,especiallyoverthepastdecade.Muchofthischangehasbeendrivenbyexponentialgrowthoftheglobaldigitaleconomy,whichhasenabledadramaticexpansioninaccesstofinancialservicesforpoorpeople.Yet,increasedaccesstodigitalfinancialserviceshasalsobroughtnewr
9、iskstofinancialstabilityandintegrityandtoconsumers.Findingtherightbalancebetweensupportingthesechangessofinancialservicescanadequatelymeettheneedsofthepublic,whilealsomaintainingastable,transparentandsafemarketplace,hasbecomeasignificantchallengeforfinancialregulatoryauthorities.TheGlobalFintechRegu
10、latorSurveyprovidesauthoritieswithanopportunitytotakestockofthepolicyapproachesandtoolstheyandtheirpeersusetoeffectivelymanagethedevelopmentsoffintech.ItprovidesabirdseyeviewofhowexternalshockssuchasCovid-19haveinfluencedthetrajectoryoffinancialregulationandsupervisionoffintechinstitutions.Bysurveyi
11、ngjurisdictionsfromaroundtheworld,withvaryingincomelevelsanddifferingpolicyobjectives,thesurveyhighlightsglobaltrendsinprioritiesrelatingtofintechandperceptionsofrisk.Thefirstiterationofthesurvey(in2019)providedinsightsintohowregulatorswereinitiallyrespondingtodevelopmentsinequity-crowdfunding,peer-
12、to-peerlendingandinitialcoinofferings.Resultsshowedthatalternativefinancewaslargelyunregulatedatthetimewithbespokeregulationjustslowlycatchinguptomarketdevelopments.Thesecondsurvey(oneyearlater)wascreatedanddisseminatedundertheauspicesoftheglobalpartnershipforfinancialinclusionwithintheG20framework.
13、FindingsshowedthatregulatorsrespondedtothechallengesofCovid-19andincreasingdigitalizationoffinancialservicesbytakingbothsector-wideandfintechspecificregulatorymeasures.RecentFindexresultshavealsodemonstratedhowmuchofadifferencedigitalfinancialservicesandfintechmadetobolsterfinancialinclusion.Thislat
14、estsurveyunderscoredtheongoingimpactofthepandemicandhowregulatorsaremanagingpersistentandemergingconsumerriskswithinfintech,howtheyaspiretousetechnologytobettermanagesuchrisksandhowbalancingrisksandopportunitieseffectivelyhelpachievesignificantimprovementsinfinancialinclusionandaccesstofinance.Atthe
15、WorldBankweseeagrowingdemandfromclientcountriesfordatadrivenassessmenttoolsofriskinfinancialservices.Recognisingthis,thesurveyhasalsoexploredhowandwhereregulatoryauthoritiesareutilizingdifferenttypesofdigitalinfrastructurestoenhanceregulatoryandsupervisoryfunctionsforvariousfintechverticals.Thefindi
16、ngsinformhowtheWorldBankandotherinternationalorganizationsmightoffersupportandtechnicalassistancetoourclientcountries.TheWorldBankiscommittedtosupplyingevidence-basedknowledgeproductsthatcanhelptheglobalregulatorycommunitybetterreconcilethebenefits,suchasfinancialinclusion,andtherisksofinnovationand
17、manage,whenneeded,thetrade-offsbetweenthose.Weaimtotranslatethisunderstandingintopolicydialogueandeffective,welldesignedtechnicalassistance programmes and operations for our client countries.We thank our colleagues at the Cambridge Centre for Alternative Finance for their contributions to this impor
18、tantworkandwearegratefultohavecollaboratedwithaleadinginstitutionworkingonfintechand related topics.Jean PesmeGlobalDirector,FinanceFinance,CompetitivenessandInnovationPracticeThe World Bank GroupWorld Bank forewordForewords 5CCAF forewordThecontinuedgrowthoffintechsandincreasingadoptionofdigitalfin
19、ancialservicesregionallyandgloballyinrecentyears,presentopportunitiesaswellasrisks.Fintechindustryverticals,suchasdigitalpayments,digitallendingandcapitalraising,digitalbankingandsavings,insurtech,aswellasdigitalassetsrelatedactivities,allsawaccelerateddevelopmentduringtheglobalpandemic.Byprovidingn
20、ewandinnovativechannelsandinstruments,fintechscanmakefinancialservicesmoreaccessible,convenient,andaffordableforconsumersandsmallandmedium-sizedenterprises.However,fintechbusinessmodelsand related activities can also introduce or exacerbate a range of risks,from consumer protection,market conductand
21、integrity,tofinancialstability.Howfinancialauthoritiesaroundtheworldarerespondingtoboththeopportunitiesandchallengesbroughtbytherapiddigitalizationoffinancialservices,therefore,isan important area of research.Buildingonthefoundationoftwopreviousglobalregulatorystudies,theWorldBankandtheCambridgeCent
22、re for Alternative Finance(CCAF)at the University of Cambridge Judge Business School conducted The 3rd Global Fintech Regulator Survey to shed light on the evolving priorities and changing regulatory landscaperegardingfintechandotherformsofdigitalfinancialservices.BetweenAprilandJuly2022,thejointres
23、earchteamsuccessfullysurveyed128financialauthoritiesfrom106jurisdictions,with68%ofresponses coming from authorities in emerging markets and developing economies.Thiscomprehensivedatasetoffersauniqueviewintotheworldoffintechregulators,supervisors,andpolicymakers.Thesurveyandresultingreportfocusedonfo
24、urthematicareas:themedium-termimpactofCovid-19onfintech-relatedregulationandpolicy,howregulatorsandsupervisorsperceiveconsumerrisksassociatedwithfintechactivities,theevolvinglandscapeandrecentdevelopmentsinbuildingvitaldigitalregulatory and supervisory infrastructures,and the current state of superv
25、isory technology creation and adoption.Wehopethatthedataandinsightsgeneratedfromthisglobalsurveywillinformtheworkandpracticeoffintechregulators,supervisorsandpolicymakers,helpthembenchmarkresponses,frameworksandactivities,andfacilitatemeaningfulpeerlearningandknowledgeexchange.Wealsohopethatthelearn
26、ingsfromthisstudywillbeofinteresttoandpracticallyusefulforotherstakeholdersintheburgeoningglobalfintechecosystem,includingfintechfirmsandindustryassociations,end-usergroups,theinvestorcommunity,financialincumbents,internationalstandard-settingbodies,aswellasdevelopmentinstitutionsand organizations.A
27、fter all,it is in the interest of all these stakeholder groups that the development of the fintechindustrybecomesmoresustainable,inclusive,andresponsible.AttheCCAF,weareimmenselygratefulforthetimeandsupportofallrespondingfinancialauthorities,andalsofortheopportunitytoworkwithourWorldBankcolleagueson
28、thisglobalresearch.WealsowishtoexpressourgratitudetotheUKForeign,Commonwealth&DevelopmentOffice,andTheBill&MelindaGates Foundation for their support that made this study possible.Bryan ZhangCo-FounderandExecutiveDirectorCambridge Centre for Alternative FinanceThe 3rd Global Fintech Regulator Survey6
29、TheUKwelcomestheCambridgeCentreforAlternativeFinances(CCAF)latestexpertassessmentofFinTechregulationandsupervisionoverthepastyear,researchedinpartnershipwiththeWorldBank.Followingpreviousannualbenchmarkingreports,The 3rd Global FinTech Regulator Survey,writteninpartnershipwiththeWorldBank,sharesuniq
30、ueinsightsacrossmarketstoinformfutureFinTechpolicyand regulation.Overthepastdecade,theUKhasbeenattheforefrontoftheglobalFinTechrevolutionwhereinnovationhascreatedjobs,improvedaccesstofinancialservicesandstrengthenedcompetitiveness.Notably,theUKsFinTechindustryshowedtremendousresiliencetotheCovid-19p
31、andemic,withUKFinTechsattracting$24.5billionofinvestmentinthefirsthalfof2021,thehighestvolumeofdealsonrecord,rankingfirstinEuropeandsecondtotheUSglobally.TheglobalFinTechindustrywasnotimmunetothedisruptioncausedbyCovid-19,however,itadaptedandplayedanimportantroleinthepandemicresponse,attractingnewcu
32、stomers,andsupportingindividualsandenterprisestoaccesscrucialfinancialservicesduringatimeofunprecedentedeconomicuncertainty.EvidencesetoutinthisreporthelpsusbetterunderstandhowFinTechrespondedtothesechallengingmarketdynamics,withenablingregulationandsupervisionthathaveprovenintegraltomaintainingbusi
33、nesscontinuityandfinancialstability.ThereportsfindingswillbeofgreatinteresttofinancialservicesregulatorsandsupervisorsinAsianandAfricancountrieswhereFinTechplaysanimportantroleindeepeningdomesticcapitalmarketsandprovidingaccesstocreditsothatpeopleandbusinessescansave,borrow,andinvest.Frominnovationo
34、fficestoregulatorysandboxdevelopment,theUKworkswithregulatorsaroundtheworldtostrengthenregulatory environments,to enable FinTech innovation and protection businesses and consumers.This research series from CCAF and the World Bank provides an excellent evidence base for both FinTech innovators and th
35、e global regulatory community.Andrew Mitchell MP MinisterofState(DevelopmentandAfrica)Foreign,Commonwealth&Development Office(FCDO)UK Foreign,Commonwealth&Development Office foreword 7Bill&Melinda Gates foundation forewordResearch teamThe joint World Bank and Cambridge Centre for Alternative Finance
36、(CCAF)research team consists of the followingindividuals:Alexander Apostolides(CCAF),Sarah Ombija(CCAF),Zain Umer(CCAF),Kyriakos Christofi(CCAF),Philip Rowan(CCAF),Nick Clark(CCAF),Bryan Zhang(CCAF),Juliet Ongwae(CCAF),Matt Grasser(CCAF),Simone di Castri(CCAF),Jose Miguel Mestanza(CCAF),Pedro Schill
37、ing de Carvalho(CCAF),Shuli Hu(CCAF),Harish Natarajan(World Bank),Buddy Buruku(World Bank),and Nana Yaa Boakye-Adjei(World Bank).Contributors and reviewersGabrielle Inzirillo(AGDM)andWaleed Samarah(GIZ)reviewedthesurveyandprovidedvaluableinsight.WewouldliketothankthecontributorsandreviewersJean Pesm
38、e(World Bank),Olivier Mahul(World Bank),Mahesh Uttamchandani(World Bank),Niraj Verma(World Bank),Saba Bint Abbas(World Bank),Matei Dohotaru(World Bank),Patrick Meagher(CGAP),Marco Nicoli(World Bank),and Veronica Trujillo(World Bank).AcknowledgementsTheresearchteamwouldliketothankthemanyfinancialauth
39、oritieswhomadethisresearchpossiblewiththeirgenerouscommitmentoftimeandwillingnesstosharetheirexperiences.AfulllistofparticipatingjurisdictionsandfinancialauthoritiescanbefoundinAppendix1.TheCCAFwouldliketothankLouiseSmithfordesigningthereportandAlpaSomaiyaforeditingthereport.WearegratefultoNeilJessi
40、manforpressandcommunicationssupportandDeeAllenforhersupportincreatingthedatabaseoffinancialauthoritycontacts.WearealsogratefultoHunterSimsforhisoverall support.The 3rd Global Fintech Regulator Survey8AcronymsAMLanti-moneylaunderingAPACAsiaPacificAPIapplicationprogramminginterfaceCBDCcentralbankdigit
41、alcurrencyCFTcombatingthefinancingofterrorismCGAPconsultativegrouptoassistthepoorCOVID-19Coronavirusdisease2019DFSdigitalfinancialservicesDRSIdigitalregulatoryandsupervisoryinfrastructureEMDEsemergingmarketanddevelopingeconomiese-KYCelectronicknowyourcustomerFCPfinancialconsumerprotectionMENAMiddleE
42、astandNorthAfricaOECDOrganizationforeconomiccooperationanddevelopmentNFTsnon-fungibletokensSSAsub-SaharanAfrica 9Glossaryapplication programming interface(API)allowssoftwareprogramstointeractbyexchangingdata,enablingcertainactionssuchasmakingatransaction.ThisincludespaymentAPIs,dataAPIs,ecosystemexp
43、ansionAPIs,andconsentandidentityAPIs(WorldBank,2020b).central bank digital currency(CBDC)adigitalformofcentralbankmoneythatisdifferentfrombalancesintraditionalreserveorsettlementaccounts.Itisenvisionedasanewformofcentralbankmoney,namelyacentralbankliability,denominatedinanexistingunitofaccount,which
44、servesbothasamediumofexchange and a store of value(BIS,2018b).consumer protectiontheframeworkoflaws,regulations,andinstitutionalarrangementsthatsafeguardsconsumersbyensuringtheyaretreatedfairlyandresponsiblyinthefinancialmarketplace(WorldBank,2022a).cybersecurityrelatedtopreservingconfidentiality,in
45、tegrity,andavailabilityofinformationand/orinformationsystemsinthecybermedium.Itcanalsoincludeauthenticity,accountability,non-repudiation,and reliability(FSB,2018a).DFS consumer riskaconditionorfactorthatexposesaconsumertopotentialoractualharmorloss(bothfinancialandnon-financial)whileusingDFS(CGAP,20
46、22).digital assetadigitalinstrumentissuedorrepresentedusingdistributedledgerorsimilartechnology.Itdoesnotincludedigitalrepresentationoffiatcurrencies,suchase-money(FSB,2022a).digital financial services(DFS)services,suchaspayments,transfers,savings,credit,insurance,securities,financialplanning,andacc
47、ountstatements,thataredeliveredviadigital/electronictechnology(for example,money,payment cards,and a regular bank account)(World Bank,2020b).digital infrastructurethedigitaltechnologiesthatprovidethefoundationforanorganizationsinformation technology and operation(World Bank,2019).digital sandboxprov
48、idesaccesstofeatures,suchassyntheticdata,anAPImarketplace,adigitaltesting environment,and a collaboration platform,to support innovation and address challenges in tech development and adoption(FCA,2022a).fintechanacronymforfinancialtechnology.Itreferstotheadvancesintechnologythathavethepotentialtotr
49、ansformfinancialservices,stimulatingthedevelopmentofnewbusinessmodels,applications,processes,and products(World Bank,2020d).financial interconnectedness-relatestofinancialdistressatoneinstitutionthatcanmateriallyincreasethelikelihoodofdistressatotherinstitutionsgiventhenetworkofcontractualobligation
50、sinwhichfirmsoperate.For instance,a banks systemic impact is likely to be positively related to its interconnectedness vis-visotherfinancialinstitutions(BCBS2021).innovation acceleratorsupportsearly-stage,growth-drivencompaniesthrougheducation,mentorship,andfinancing.Startupsenteracceleratorsforafix
51、edperiodandaspartofacohortofcompanies.Theaccelerator experience is a process of intense,rapid,and immersive education aimed at accelerating the lifecycleofyounginnovativecompanies,compressingyearsoflearningthroughexperienceintojustafewmonths(CCAF and World Bank,2020).The 3rd Global Fintech Regulator
52、 Survey10innovation officeadedicatedfunctionwithinaregulatorthatengageswithandprovidesregulatoryclarificationtoinnovativefinancialservicesproviders.Thesearealsocalledinnovationorfintechhubs(World Bank,2020d).payment tokens/digital currencycurrency/paymenttokensintheirpureformfulfilltheeconomiccriter
53、iaof money,serving as a means of exchange,store of value,and unit of account(Zetzsche,Arner,and Buckley,2020).regulatory innovation initiatives abroadsetofactivitiescarriedoutbyregulatorstoinnovateregulatoryandsupervisoryfunctions,processes,organizations,andapplications,whichoften,butdonotnecessaril
54、y,involvetheuseoftechnologicalsolutions.Theseincludeaninnovationoffice,aregulatorysandbox,andsuptech solutions(CCAF and World Bank,2020).regulatory sandboxformalregulatoryprogramsthatallowmarketparticipantstotestnewfinancialservicesormodelswithlivecustomers,subjecttocertainsafeguardsandoversight(CCA
55、FandWorldBank,2020).security tokenstokenswithspecificcharacteristicsprovidingrightsandobligationssimilartospecificinvestments,like a share or debt instrument(FCA,2019).sentiment analysisaspecificformofnaturallanguageprocessingthatfocusesoninferringtheemotionalcontent expressed in a collection of tex
56、t or transcribed speech.Examples include social media data mining to understand public sentiment surrounding a given topic or entity,and analysis of customer service requests/complaintstoinformescalation(BIS,2018).stablecoins/tokensacategoryofcryptoassetsthataimstomaintainastablevaluewithreferenceto
57、aspecifiedasset,orbasketofassets,andprovidestabilitycomparedtothehighvolatilityofunbackedcryptoassets.Theyareoftenpeggedtoaspecificfiatcurrency(FSB,2022a).suptechanacronymforsupervisorytechnology.Itisdefinedastheuseofinnovativetechnologybyfinancialauthoritiestosupporttheirwork(BIS,2018).11Executive
58、summary1 The first iteration of the survey,whichtookplacein2019,wastounderstandregulatoryresponsestoequitycrowdfunding,peer-to-peerlending,andinitialcoinoffering.The second survey focused on the pandemics immediate impact,and regulatory and supervisory authorities policy responses to address challen
59、ges(and in some instances opportunities)arising from the pandemic.2Inthecontextofthisreport,digitalregulatoryandsupervisoryinfrastructure(DRSI)referstosystemsthatelectronicallycollect,process,andtransmitinformationtofacilitateeffectiveregulationandsupervisionofdigitalfinancialservices.DRSIprovidesfi
60、nancialauthoritieswiththenecessarydataandtoolstoenablethemtocarryouttheirfunctions.Forexample,DRSIcanincludefoundationaldata-gatheringapplicationsneededforsuptechinitiativesdevelopment,orinfrastructuredeployedbyafinancialauthoritytoenabledigital regulatory reporting.3Thesurveyinstrumentcanbeviewedus
61、ingthislink:https:/ 2022 World Bank-CCAF Global Fintech Regulator Survey is the third global survey of regulatory and supervisory authorities to assess their responses to financialtechnology(fintech)activitiesandrelatedregulatory innovation initiatives.The outputs from this survey provide timely dat
62、a andanalysistoinformtheworkandpracticeoffinancialauthoritiesaroundtheworld.Acentralobjective of the study is to provide information that regulators can use to benchmark,evaluate,andprioritizetheirpolicyresponsestofintechdevelopmentswithintheirmarket.BetweenAprilandJuly2022,thejointCCAFand World Ban
63、k research team surveyed 128 financialauthoritiesfrom106jurisdictions.Surveyrespondents came from authorities in East Asia Pacific(21),EuropeandCentralAsia(28),LatinAmerica and the Caribbean(24),Middle East and NorthAfrica(14),NorthAmerica(3),SouthAsia(6),andsub-SaharanAfrica(32).For this iteration
64、of the survey,1 the research aimwastounderstandtheextenttowhichpolicymakers continue to be impacted by the Covid-19pandemicaswemoveawayfromthecrisis.The survey provides insights into the types of consumer risks that have emerged because of the pandemic and the impact of such risks on policy objectiv
65、es.The survey also explores the important role of information technology systems and infrastructures in supporting oversight and supervisionacrossfintechverticals.Aswithpreviousreports,theempiricaldatafrom this survey enables the development community to better prioritize and tailor their support to
66、 regulatory and supervisory agencies,particularly in emerging market and developing economies(EMDEs).Thissupportcouldincludethedevelopmentofeffectivecapacity-buildinginitiativesandtargeted,well-researchedknowledgeproducts.This survey is one of the largest empirical studies todateontheregulationandsu
67、pervisionoffintechaimedatfinancialauthorities.Importantly,almost70%ofrespondentsoverseefintechdevelopmentsinEMDEs.Survey structure and main findings The survey asked a range of questions covering four key themes:1 Themedium-termimpactofCovid-19onpolicyresponsestofintech2 Perceptions of continuing an
68、d emerging consumerriskswithinfintechandtheirimplications for consumer protection 3 The landscape of different types of digital regulatory and supervisory infrastructures(DRSI)2 used to enable effective regulation and oversightoffintechmarkets4 A mapping of suptech activitiesA link to the survey que
69、stions can be found in this footnote.3 Covid-19continuestocatalyzefinancialauthoritiesinEMDEstoprioritizefintech-relatedworktodeepenfinancialinclusion.Fifty-sixpercentofrespondentsinEMDEshaveincreasedthepriorityoffintechcomparedto35%ofrespondentsinadvanced economies.This is particularly the caseinsu
70、b-SaharanAfrica(SSA)where75%ofrespondentsreportanincreaseinfintechprioritization.Regulatory innovation initiatives,such asinnovationofficesandregulatorysandboxes,arespecificareasofgrowthinEMDEs.The 3rd Global Fintech Regulator Survey12Generally,respondentsperceivethatfintechalignswiththeiroverarchin
71、gpolicyobjectives.However,asignificantproportionciteconcernsabout effectively mitigating existing and emerging consumer risks.Respondents report capacity and resource constraints as the main challenge in addressing consumer risks.Overall,authorities aremostworriedabouttheirinternalcapacitytoeffectiv
72、ely mitigate consumer risks related to digital assets and cryptoassets.The top three risks that have increased for surveyrespondentsduetoCovid-19relateto cybersecurity,fraud and scams,and other consumerprotectionissues.Seventy-eightpercentof respondents considers threats to cybersecurity asthetopris
73、kinfintech.Fraudandscamsarethesecondmostcommonrisk,reportedby67%ofrespondents,upfrom18%inthe2020survey.General consumer protection risks are of greater concernforfinancialauthoritiesinEMDEs(56%)comparedtothoseinadvancedeconomies(43%).Using suptech applications to effectively respond to consumer risk
74、s is an important objective for alargeproportionofrespondents.However,consumer education and literacy initiatives are the mostcommonwaysfinancialauthoritiescurrentlyrespond to risks to consumers.Far more respondents in advanced economies use DSRIthanthoseinEMDEs,andthemostcommonapplications are for
75、consumer protection and ongoing supervision.RegulatorswouldliketouseDRSIformonitoringcompetition practices,policymaking,and international regulatory coordination.The most desiredareaforDRSIapplicationismonitoringcompetitionpractices,citedby50%ofrespondents.However,itisalsotheregulatoryfunctionwithth
76、elowestcurrentlyactive/operationalDRSI,reportedbyjust6%ofrespondents.Forty one percent of respondents indicated a desiretoapplyDRSItoopenbanking.Otherdigitalinitiatives that regulators and supervisors are interestedinaredigitalID/e-KYC,CBDCs,anddigitalassetsupervision.Limitedknowledgeand/orexpertise
77、 is a fundamental challenge to developing effectiveDRSIformorefinancialauthoritiesinEMDEs.Forty per cent of all respondents have one or more operationalsuptechapplications.Outof60%offinancialauthoritieswhorespondednegativelyhalfhave begun their journey and are either currently developing a suptech a
78、pplication,or have created theirstrategyinhowtomoveforwardwithoperationalising suptech applications.Financial authorities are also implementing suptech tools to enhance consumer protection.While only 18%ofallrespondentsindicatedtheyalreadyhavesuptechapplicationsforconsumerprotection,31%indicated tha
79、t they plan to introduce one in the future.Respondentsreportedseveralbenefitsofsuptechadoption.Improvedrisk-basedsupervision,aswellasimprovedscope,accuracy,consistency,and timeliness of collected information,and more efficientuseofresourcesarethebiggestpositiveimpactsofsuptechadoption.Otherbenefitsc
80、itedinclude greater internal supervisor coordination and moreefficientinformationflows.Policy implications and potential areas for further work The survey data presented in this study enables discussionsonpolicyimplicationsforbothfinancialauthoritiesandthewiderdevelopmentcommunity.These areas are in
81、terrelated and mutually reinforcing.There are opportunities to strengthen and enhancefintech-relatedconsumerprotectionmeasures.Thecreationofnewbusinessmodelsthat may sit outside the regulatory perimeter of many jurisdictions,limits authorities ability to establish supervisory approaches that help mi
82、tigate consumerrisksarisingfromthesenewbusinessmodels.Authorities may need technical and capacity-buildingsupportinapplyingapproaches,suchastestandlearnorsandboxes,tohelpfacilitate oversight of these business models and keep consumers protected,ahead of establishing or extendingtheregulatoryframewor
83、kperimetertoinclude such activities.13A considered and coordinated policy response is also important to address the concerns and uncertainty relating to consumer risk in the digital assets sector.This might include evaluating the potential risks and harm that may arise in the sector and providing be
84、tter data and technology tosupportfinancialauthorities.However,capacitybuilding is also needed so that regulators can better understand the digital assets space and thus respond to the challenges it might create.Supportingenhancedcybersecurityframeworksis becoming ever more important in the face of
85、rapid digital transformation.4 This is particularly thecaseinEMDEs,wherefinancialandregulatoryinfrastructure may be less resilient to emerging challenges compared to that in advanced economies.Strategically strengthening digital and regulatory supervisoryinfrastructurecapabilitieswouldsupport severa
86、l positive outcomes,for both financialauthoritiesandsupervisedfirms,whilemitigating some of the challenges they experience.4Tosupporteffortstoenhancecybersecurity,theWorldbankhasannouncedanewglobalfund:https:/www.worldbank.org/en/news/press-release/2021/08/16/world-bank-and-partners-announce-new-glo
87、bal-fund-for-cybersecurityAn area of particular interest is the application of suptech tools.Resource and capacity constraints arelimitingmanyfinancialauthoritiesabilitytoeffectivelydeployand/orscalesuptechactivities.Fundamental to this challenge is access to necessary data.To realize the potential
88、of suptech inoverseeingfinancialmarkets,authoritieswillalsorequire support in developing effective data science techniques.Finally,tying a number of these themes together,financialauthoritiesneedresearch,capacitybuilding,and technical support to balance the benefitsandrisksoftheincreaseddigitalizati
89、onoffinancialservices.ThisisparticularlythecaseforrespondentsinEMDEs,whoperceivethatboththepotentialbenefitsandrisksofthisdigitalizationarehigher compared to their counterparts in advanced economies.1.Introduction and research motivation1.Introduction and research motivation151.Introduction and rese
90、arch motivationTheglobalCovid-19pandemichasbroughttotheforethepotentialbenefitsandchallengesofdigitalfinance.Digitalfinancialservices(DFS)havebeenseen as an integral part of the response to the pandemic,enablingbusinesscontinuityandfinancialstability(Arner,D.etal.,2022b).TherehavebeencaseswhereDFS,i
91、ncludingmanyformsoffintechactivities,havesupportedrecoveryefforts,facilitatingpayments,savings,andcredit,whilesupportingthelong-termgoalsofdevelopingdigitaleconomiesande-government,andsupportingaimssuchasfinancialinclusion(WorldBank,2020b;Sahay,et al.,2020).This third global survey of regulatory and
92、 supervisory authorities assesses their response tofintechandrelatedregulatoryandsupervisoryinnovationinitiatives.Itfollowsthetwopreviousstudies:1 Regulating Alternative Finance:Results from a Global Regulator Survey(CCAF and World Bank,2019)2 The Global-CCAF Covid-19 Fintech Regulatory Rapid Assess
93、ment Study(CCAF and World Bank,2020),henceforth referred to as The Rapid Assessment StudyThis joint survey is part of a broader collaboration betweentheCCAFandtheWorldBank,whichincludessurveysofthefintechmarket.Thecollaboration also led to The Global COVID-19 Fintech Market Impact and Industry Resil
94、ience Study(CCAF,WEF,and World Bank,2022)and The Global Covid-19 FinTech Market Rapid Assessment Study(CCAF,WEF,and World Bank,2020).Thefindingsfromthissurveyaimtoassistpolicymakers,regulators,market participants,and the development community understand the global regulatory communitys perceptions o
95、f key topics relatingtofintech.ThecontinuingimpactoftheCovid-19pandemichasrapidlytransformedglobalfinancialmarkets,andregulatorsandsupervisorsmust respond to the transformation.The increase intheuseofdigitalfinancialproductsandserviceshasalsohighlightedagrowingconcernregardingtheimpactoffintechoncon
96、sumers(WorldBank,2022a).Inaddition,theabilityoffinancialauthorities to respond to these changes often relies onwhethertheappropriatedigitalinfrastructureis in place and the availability of the skills required to use emerging regulatory and supervisory technology.This report provides data and analysi
97、s to help financialauthoritiesbenchmark,evaluate,andprioritizetheirresponsestofintechdevelopments.ItdescribesthedifferentexperiencesofEMDEparticipants,giving the development community insightintohowtoprioritizeandtailortheirsupportto regulators as they confront challenges in dealing withthecontinued
98、disruptionoftheCovid-19pandemic.The survey focuses on four key themes:1 Anassessmentofthemedium-termimpactofCovid-19(Chapter 3)2 Consumerrisksconcerningfintechactivities(Chapter 4)3 The landscape of digital regulatory and supervisory infrastructure(Chapter 5)4 Global suptech mapping(Chapter 6)An ass
99、essment of the medium-term impact of Covid-19(Chapter 3)Regulatorsandsupervisorsaroundtheworldhave had to respond to the accelerated adoption offintechandDFSduetothepandemic.Thishascreated challenges,such as ensuring regulatory and supervisory operations continue and accelerating the need to establi
100、sh regulatory innovation initiatives.TogetherwiththeresultsfromThe Rapid Assessment Study,this chapter evaluates the impact ofthepandemiconfinancialsectorauthoritiesviewsandinnovationinitiativesrelatedtofintech.The 3rd Global Fintech Regulator Survey16Consumer risks concerning fintech activities(Cha
101、pter 4)Morefinancialauthoritiesarebecomingawareoftherisksthattheincreaseduseoffintechposestoconsumers.Someoftheserisksarenew,whileothers are existing risks that the pandemic has intensified(WorldBank,2022b).Thischapterevaluates regulators and supervisors perceptions offintech-relatedconsumerrisksand
102、howtheyidentify,assess,prioritize,and address these risks.The landscape of digital regulatory and supervisory infrastructure(Chapter 5)Digitalinfrastructureisanecessarybasethatthedigital economy needs to transform the global economy(WorldBank,2019).TheCovid-19pandemic has highlighted the importance
103、of such digitalinfrastructure,especiallyinfinancialmarkets,as it can provide societal resilience and business continuity(IFS,2020).In addition,the rapid digitalizationoffinancialproductsandservices,andthecomplexecosystemsoffinancialmarkets,haverequiredfinancialauthoritiestoadapttheirapproaches to re
104、gulation and supervision.Financial authorities need to ensure that technology,people,processes,systems,and digital tools are strategically deployed to effectively oversee thesenewmarketsandachievetheirregulatorymandates and social priorities,such as ensuring adequateconsumerprotection,promotingfinan
105、cialinclusion,andensuringfinancialsystemstability.Such infrastructure is costly to develop and maintain,and thus the lack of digital regulatory and supervisory infrastructure can act as a barrier to digital transformation(di Castri,Grasser,and Kulenkampff,2020).Toachievethis,thereisaneedforDRSItobei
106、nplace.DRSIreferstodigitaltechnologiesthatcollect,process,and transmit information to facilitate effective regulation and supervision of financialservices.Itprovidesfinancialauthoritieswiththedataandtoolstheyneedtocarryouttheirfunctions.DRSIcanincludefoundationaldata gathering applications needed fo
107、r developing suptech initiatives,or infrastructure to enable digital identity initiatives such as common platforms formultipleIDusecasesaswellasdatastoragefacilities.This infrastructure is needed to realize the full potentialofdigitalfinancialservices,butitcanalsobe instrumental in enabling the effe
108、ctive oversight offinancialmarkets.DRSIcanalsobedeployedtodevelopandimplementnewtechnologiesthatrequire reliable and secure foundational building blocks.This chapter maps the global landscape of suchinfrastructure,aswellasfinancialauthoritiesapproaches and priorities in developing it.Global suptech
109、mapping(Chapter 6)Suptech refers to the application of technology anddataanalysissolutionstoenhanceafinancialauthoritysfinancialmarketoversightcapabilities(BIS,2019).Itallowsfinancialauthoritiestoaccessmoregranular,diverse,timely,andtrustworthydata to better inform their decisions and improve operat
110、ionalefficiencies.Thetechnologyaimstohelp supervisory agencies digitize(in the main)reporting and regulatory processes,enabling them tomonitortheriskandcomplianceoffinancialinstitutionsmoreefficientlyandproactively.Thesurveyprovidesanoverviewofthesuptechtoolsthataredevelopedbyfinancialauthorities,as
111、wellasthebenefitsfinancialauthoritiesreceivefromtheir use,and the challenges they face as they deploy these tools.Policy implications and areas for further research(Chapter 7)This study provides timely data and analysis aimedatenablingfinancialauthoritiesgloballytobenchmark,evaluate,and prioritize t
112、heir responses tofintechdevelopments.Thisalsoprovidesanopportunity to discuss policy implications for both financialauthoritiesandthewiderdevelopmentcommunity.This chapter sets out several interrelated policy implications and areas for future research based on the empirical evidence gathered from th
113、is study.These are centered on enhancing consumer protection measures,developing policy approaches to digital assets,supportingenhancedcybersecurityframeworks,strategicallystrengtheningDRSIandsuptechcapabilities and supporting capacity building and technicalassistanceinkeyareasidentifiedbytherespond
114、ents.2.Survey methodology and sample2.Survey methodology and sample182.Survey methodology and sample2.1 Survey administration and fieldwork5Thesurveyinstrumentcanbeviewedusingthislink:https:/ World Bank research team and centered aroundimportantthemesinfintechregulationandsupervision.Before being di
115、stributed,the survey wastestedonasmallnumberofregulatorsandsupervisors to determine the most pertinent set of questions,and the appropriate phrasing and terminology,andtoensuretheanswerscouldbe captured in an effective and timely manner.In response to the feedback from the pilot,an extensiveglossary
116、wascreatedandembeddedwithinthesurveytohelpparticipantswiththeirresponses.The 2022 Global Fintech Regulator Survey(the survey forthisreport)wasdesignedbetweenJanuaryandMarch2022anddistributedonlinetofinancialauthorities from April to July 2022.The individuals whowereaskedtocompletethesurveywerethosef
117、amiliarwiththeirinstitutionsregulatoryapproach,framework(s),andpracticestoregulateand/orsupervisefintechactivities,entities,andrelatedDFS.5This report presents the empirical data collected from 128 authorities in 106 jurisdictions.The targetaudiencewasregulatoryandsupervisoryauthoritieswithremitover
118、someorallthefintechverticalsintheirjurisdiction.Thisincludesfinancialconduct authorities,central banks,securities and capital market authorities,and insurance regulators.Ofthe128responses,77werefromcentralbanks,representing60%ofthetotalresponses,withtheremaindermainlycomprisingsecurities/capitalmark
119、etsauthoritiesandotherfinancialauthorities.Intheanalysisthatfollows,thegroupotherfinancialregulatorsincorporatesallnon-centralbankrespondents.GiventhefocusonEMDEs,thesejurisdictionsweretargetedmorespecifically.Asaresult,87responseswerereceivedfromEMDEs,whichrepresents68%ofthetotal.Severalchannelswer
120、eusedtoidentifysuitableparticipantsanddeterminewhethertheywouldbewillingtotakepartinthestudy.Thesechannelsincluded approaching previous participants in The Rapid Assessment Study(CCAF and World Bank,2020),the 2019 Regulating Alternative Finance:Results from a Global Regulatory Survey(CCAF and WorldB
121、ank,2019),andtheCCAFsonlinefintechexecutive education program(Cambridge Fintech and Regulatory Innovation Program).Contacts withintheCCAFandtheWorldBanksglobalnetworkswerealsoapproached.Asurveyofexpertswithinfinancialauthoritiescanprovide data on global perceptions of current issues thataffectdigita
122、lfinancialservices,allowingaglobalbenchmarkingofregulatoryandsupervisoryviewsontopicsofinterest.However,itisacknowledgedthat this captures the opinions of only a part of the broaderdigitalfinancialecosystem.The 3rd Global Fintech Regulator Survey19Figure 2.1:Geographical distribution of respondents2
123、.2 Sample by geography and income classification6 The total number of jurisdictions includes all countries in the World Banks list and territories in the survey.Anguilla,Jersey ChannelIslands,andPalestinearecountedasuniquejurisdictions.Percentageofjurisdictionsperregioninthesampleisthenumberofrespon
124、dentsintheregiondividedbythetotalnumberofrespondentsinthesurvey.Percentageofregioncoveredisthedistinctnumber of jurisdictions represented in the region divided by the total number of jurisdictions in that region.Figure2.1mapsthe128financialauthoritiesfrom106 jurisdictions that participated in this s
125、tudy.The fulllistoffinancialauthoritiesisgiveninAppendix1.This study is based on a geographically diverse sample that is also representative of the World Banks country income levels.6 Table 2.1 breaks downparticipatingrespondentsbytheWorldBanksregionalclassification.Table 2.1:Geographical distributi
126、on of respondents by regionRegionNumber of respondentsPercentage of jurisdictions per region in the sample(%)Percentage of region covered(%)East Asia and the Pacific 211646Europe and Central Asia282242Latin America and the Caribbean241944Middle East and North Africa141146North America32100South Asia
127、6563Sub-Saharan Africa322544Total128100The regional distribution of this study is similar to that in The Rapid Assessment Study.The largest numberofrespondentswasfromSSA,representing32%ofthesample,withEuropeandCentralAsiarepresenting28%oftheresponses.WhileNorthAmerica and South Asia had the smallest
128、 number ofrespondents,100%ofjurisdictionsinNorthAmericaarerepresentedinthestudyand63%ofjurisdictions in South Asia.Number of respondent financial authorities 1 2 32.Survey methodology and sample20Figure 2.2 illustrates the distribution of responses accordingtothefourincomegroupsclassifiedbythe World
129、 Bank.The sample contains responses from jurisdictions across all four income classifications,with39%ofthesamplefromeitherlow-orlower-middle-incomejurisdictions.7 Advancedeconomiesaredefinedasjurisdictionsfromthehigh-incomegroup,whileemergingmarketanddevelopingeconomiesincludesupper-middle-income,lo
130、wer-middle-income,andlow-income economies.7 The classification of World Bank regions and income groups is from the World Bank(World Bank,2022e).Figure 2.2:Breakdown of respondents by World Bank income groups(N=128)32%29%10%29%High income Upper middle income Lower middle income Low income3.Medium-ter
131、m impact of Covid-19 3.Medium-termimpactofCovid-19223.Medium-term impact of Covid-19TheCovid-19pandemichasacceleratedtheadoptionoffintechandDFS,asevidencedbyincreased client acquisition and turnover volume acrossmostfintechverticals(CCAF,WEF,andWorldBank,2020;CCAF,2021b).Thegrowthintransactionvalueo
132、fretail-facingfintechplatformsincreasedby47%between2019(USD357billion)and2020(USD526billion)(CCAF,WEF,andWorld Bank,2022),especially in digital payments and digital lending.In developing economies(excludingChina)20%ofadultsmadeadigitalmerchantpaymentin2021andfor8%ofthose,itwasthefirsttimetheyhaddone
133、so(WorldBank,2022b).ThisgrowthinDFSuseiscorroboratedby The Rapid Assessment Study,whereregulatorsalsoidentifiedaglobalincreaseinfintech/DFSuse(CCAF and World Bank,2020).Financial regulators and supervisors have a pivotal role to play in alleviating market uncertainty and risk,minimizing consumer dis
134、tress,and supporting financialintermediation.Risks,bothexistingandemerging,must be understood,monitored,and managed.These risks include maintaining the stabilityofthefinancialsystem(FSB,2022b;IMF,2022),increased data protection and cybersecurity challenges(CCAF,WEF,andWorldBank,2020;FATF,2020),aswel
135、lasawiderangeofconsumerrisks,such as fraud(World Bank,2021a,2022b).Covid-19causedfinancialauthorities,especiallythoseinEMDEs,tore-evaluatetheirprioritizationoffintech(CCAFandWorldBank,2020).Newrisksthat emerged during this period made regulating andsupervisingfintech/DFSmorecomplex.Theextraordinaryg
136、rowthofdecentralizedfinance(DeFi)presentedmarket,liquidity,andcybersecurity risks against a backdrop of legal uncertainties(IMF,2022).The interlinkages betweenDeFiandthetraditionalfinancialmarketalsoelevatedfinancialstabilityrisks,includingcontagion risks(ESMA,2022).The pandemic also impacted the ca
137、pacity,activities,and operations of regulators and supervisors aroundtheworld,forcingthemtofinddigitalwaysof responding to these impacts(CCAF and World Bank,2020).Tothisend,somefinancialauthoritiesaccelerated changes to their supervisory practices,passingnewregulationsanddirectives(eithertemporary o
138、r permanent).For example,many regulators and supervisors launched consumer protection initiatives.Regulatory innovation initiativeswerealsoaffected,asresourceswerereadjusted or reallocated or,occasionally,plans draftedbeforethepandemicwerefast-trackedtocompletion.BuildingontheknowledgegainedfromThe
139、Rapid Assessment Study,this chapter focuses on the medium-termimpactofCovid-19onfinancialregulators and supervisors globally,after their initial responses at the beginning of the pandemic.It evaluateschangesintheprioritizationoffintechandidentifieschallengesinregulatingandsupervisingfintechactivitie
140、s.Thechapteralsoassessesthepandemics effect on planning,launching,and running regulatory innovation initiatives,such as regulatorysandboxesandinnovationoffices.Thechapter also includes thematic case studies on financialinclusionandcybersecurity.3.1 The prioritization of fintech due to Covid-19Figure
141、3.1showsanincreaseinthepercentageofrespondentswhoconsiderthatthepriorityoffintechhasrisenduetoCovid-19.Ithasincreasedfrom45%inThe Rapid Assessment Study in 2020,to 50%in2022.Theproportionofrespondentswhoconsiderthatthepriorityoffintechhasdecreasedduetothepandemichasfallento8%,downfrom10%ofrespondent
142、sin2020.The 3rd Global Fintech Regulator Survey23Figure 3.1:Prioritization of fintech due to Covid-19(N=127)There are considerable differences in the prioritizationoffintechbetweenincomelevels,asillustratedinFigure3.2.Fifty-sixpercentofEMDErespondents stated its priority has increased,comparedto35%o
143、frespondentsinadvancedeconomies.ThisgreaterprioritizationoffintechinEMDEsisparticularlyevidentinSSA,where75%ofrespondentscitedanincreaseinfintechprioritization due to the pandemic.Figure 3.2:Prioritization of fintech due to Covid-19 emerging market and developing economies vs advanced economies(N=12
144、7)Current survey Rapid assessment survey4030201050600Percentage of respondentsRemained the same42%45%IncreasedDecreased50%8%45%10%Note:TheremainedthesamecategoryforThe Rapid Assessment Survey isacombinationoftheanswersremainedhighandremainedlow.TheNnumberinThe Rapid Assessment Surveywas72.Note:There
145、mainedthesamecategoryforThe Rapid Assessment Surveyisacombinationoftheanswersremainedhighandremainedlow.TheNnumberinThe Rapid Assessment Survey was72.40302010506070 Increased Remained the same Deceased0Percentage of respondentsAdvanced economiesAdvanced economies35%17%60%66%Emerging Markets and deve
146、loping economiesCurrent surveyRapid assessment surveyEmerging Markets and developing economies56%64%9%4%35%32%5%17%3.Medium-termimpactofCovid-1924Fintech and financial inclusionFinancialinclusionisakeyprocessinfulfillingtheUNsSustainableDevelopmentGoals(UNCDF,2022;Khera,2021).Consequently,internatio
147、nalorganizationshavesoughttoencouragefinancialinclusion.For instance,the IMF and World Banks BaliFintechAgendaseekstoensurethatnewtechnologiesenhancefinancialserviceprovisiontoachievegreaterfinancialinclusion(IMFandWorldBank,2018).TheOECDandG20havealsohighlightedtheroleofmeaningfulfinancialinclusion
148、in the context of the pandemic,stressing the part thatdigitalizationplaysinopeningnewdigitalproductsandaccesschannelstoconsumersaswellasinincreasingsocietalresilience(OECDandG20,2021).The World Bank Findex database on Financial Inclusion,Digital Payments and Resilience(World Bank,2022d)providesgloba
149、ldataonfinancialinclusionaroundtheworld,whichenablescross-referencingwiththisstudy.8Injurisdictionswithlowerlevelsoffinancialinclusionthanthemedian,theprioritizationoffintechduetoCovid-19ishigherthanthosewherethelevelsoffinancialinclusion are high.Thereisanotableassociationbetweentheprioritizationof
150、fintechbyfinancialauthoritiesandtheleveloffinancialinclusionintheirrespectivemarkets.Figure3.3indicatesthat65%ofrespondentsinlower-levelfemalefinancialinclusion jurisdictions consider that the priority offintechhasincreasedduringtheCovid-19pandemic,comparedto36%ofrespondentsfromhigher-levelfemalefin
151、ancialinclusionjurisdictions.9 Similar results are evidenced using other measures offinancialinclusion,suchasaggregatefinancialinclusion(bothmenandwomen).Thefindingofincreasedprioritizationoffintechinlowerfinancialinclusionjurisdictionsalsoholdswhenusinganalternativemeasureoffinancialinclusion,sucha
152、sthepercentageofpersonsovertheageof15whomade or received a digital payment.8Wematched90responsesoffinancialauthoritiesinthissurveywiththeirjurisdictionsinthe2021dataonfinancialinclusionFindexdatabase(WorldBank,2022d).9Respondentsweregroupedintoeitherhigherorlowerfinancialinclusiongroups,dependingonw
153、hethertheyfellaboveorbelowthemedianleveloffinancialinclusionforthesampleofrespondentswhereFindexdataandrespondentsurveydatawereavailable.Figure 3.3:Prioritization of fintech due to Covid-19 higher vs lower financial inclusion(account,female,age 15+)(N=89)Digitalpaymentshaveacceleratedfinancialinclus
154、ion,although,it is notable that the use of digital paymentsisperceivedtoberiskierinlower-levelfinancialinclusionjurisdictionsthaninhigher-levelfinancialinclusionjurisdictions.Figure3.4illustratesthatagreaterproportionofrespondentsinlower-levelfinancialinclusionjurisdictions(32%)perceiveconsumerrisks
155、indigitalpaymentstobehigh,comparedtorespondentsinhigher-levelfinancialinclusionjurisdictions(19%).InFigure3.4,themeasureoffinancialinclusionchosenispercentageofpersonsovertheageof15whomadeorreceiveda digital payment,but similar results are evidenced usingothermeasuresoffinancialinclusion.Figure 3.4:
156、Comparison of digital payments use(made or received a digital payment,age 15+)and the sectors perceived consumer risk(N=69)40302010506070 Priority increased Priority remained the same Priority decreased0Percentage of respondentsLower financial inclusion(N=45)65%22%13%Higher financial inclusion(N=44)
157、36%5%59%Higher risk Medium risk Lower riskLower financial inclusion(N=35)Higher financial inclusion(N=32)40302010500Note:Highriskincludestheresponsesveryhighriskandhighrisk.Lowriskincludestheresponsesverylowriskandlowrisk.Respondentswhoansweredunsure,orwhoansweredthatconsumerprotectionisnotintheirre
158、mit,wereexcluded.Percentage of respondents32%30%38%19%34%47%The 3rd Global Fintech Regulator Survey25The perception of consumer risk in the digital paymentssectorisnotjustassociatedwiththeleveloffinancialinclusioninpayments,butitisalsoassociatedwiththelevelofDSRIinajurisdiction.The higher the percen
159、tage of existing infrastructure inpayments,thelowertheperceivedrisktoconsumersfromthepaymentsector.Seventy-fourpercentofrespondentswhoconsidertheconsumerriskinthedigitalpaymentssectortobelowhaveactiveDRSIinpayments.Ingeneral,authoritiesinlower-levelfinancialinclusion jurisdictions are positive about
160、 the impact offintechonconsumerprotection.AsshowninFigure3.5,morerespondentsinjurisdictionswithlowerlevelsoffinancialinclusion(61%)considerthatfintechsupportsconsumerprotection,comparedtothoseinjurisdictionswithhigherlevelsoffinancialinclusion(38%).Theresultsaresimilarwhenusingmeasuresoffemalefinanc
161、ialinclusionorothermeasuresoffinancialinclusion.Figure 3.5:Comparison of financial inclusion(account,age 15+)and perceived impact of fintech on consumer protection(N=81)40302010506070 Supportive Neither supportive nor harmful Potentially harmful 0Percentage of respondentsLower financial inclusion(N=
162、41)61%7%32%Higher financial inclusion(N=40)38%32%30%3.2 Fintech,perceived risks,and regulatory objectives in light of Covid-19Todeterminewhetherriskperceptionshadchangedsince The Rapid Assessment Study,respondentswereaskedtoprioritizerisksthathadincreasedand/oremerged.Theywereaskedtoidentify,ifany,t
163、hetopthree risks they perceive as increasing due to the Covid-19pandemic.As Figure 3.6 indicates,increased cybersecurity risksarethemostreportedconcern.Seventy-eight percent of respondents perceive that these riskshaveincreasedduetoCovid-19,whichtallieswiththe78%ofrespondentsthatreportedcybersecurit
164、y as one of their top three risks in 2020.Therearenotableregionalvariations,with89%ofrespondentsinEuropeandCentralAsiaciting cybersecurity as one of their top three risks,followedbyLatinAmericaandtheCaribbean(LAC)at88%,withthelowestinSouthAsiaat50%.Fraud and scams have increased considerably as aper
165、ceivedkeyrisk,with67%ofrespondentsidentifyingitassuchin2022,comparedwith18%in2020.Thisincreasedconcernalignswithresearchsuggestingthatfintech/DFSconsumersweretargeted during the pandemic,increasing fraud and scams and the misdirection or exploitation of governmentfundsand/orinternationalassistance(F
166、ATF,2020).3.Medium-termimpactofCovid-1926Figure 3.6:Perceived risks in the fintech market due to Covid-19(N=126)Other consumer protection issues are regarded asakeyriskby52%ofrespondents,asubstantialincreasefromthe27%whoidentifieditassuchinthe2020survey.TheincreaseduseofDFSandfintechhaveexacerbatedc
167、hallengesinconsumerprotection.ThisgrowingconcernregardingconsumerrisksisadefiningthemeofChapter4andalignswithotherresearch(WorldBank,2022c).Conversely,whileoperationalrisksarestillaconcern,the proportion of authorities that cited it as one of their top three risks decreased,falling from54%in2020to35
168、%in2022.Amedium-termimpactofthepandemicisthatwhileoperational risks remain a key concern,the share of respondents in 2022 that consider it one of their top three risks has decreased.Cybersecurity,fraud and scams,and consumer protection are the top three risks reported by financialauthoritiesinbothEM
169、DEsandadvancedeconomies.ConsumerprotectionconcernswerecitedbymorerespondentsinEMDEs(56%)comparedtothoseinadvancedeconomics(43%).Note:Respondentscouldselectuptothreerisks.TheNnumberinThe Rapid Assessment Surveywas92.08060900CybersecuritySystemicCredit riskFraud and scamsPrudentialAML/CFTCo
170、mplianceConsumer protectionOther risks2%5%7%Operational35%67%7%25%13%52%78%78%18%27%54%7%0%0%3%4%5%7%Market conduct13%Percentage of respondents Current survey Rapid assessment surveyThe 3rd Global Fintech Regulator Survey27Covid-19 and perceptions of cybersecurity risks Mostfinancialauthoritiesstill
171、perceivecybersecurity threats as one of the key risks that wereelevatedduetotheCovid-19pandemic,asFigure 3.6 illustrates.At the start of the pandemic,manyfinancialauthoritiesfirstrespondedbymakingmarketparticipantsawareoftheincreasedriskasincidencesofcyber-attacksrose(Deloitte,2021).Forexample,Ugand
172、asNationalInformationTechnology Authority issued information to raiseawareness,whilesimilarmeasureswereimplementedinKenyaandNigeria(CCAF,2021a).As the pandemic progressed,regulators and supervisorsmovedbeyondcreatingawarenesstointroducing measures to ensure market resilience againstcybersecurityatta
173、cks(Deloitte,2021).Examples of such efforts include the cybersecurity fortificationinitiative2.0bytheHongKongMonetary Authority and the update of technology risk management and business continuity guidelines bytheMonetaryAuthorityofSingapore(Deloitte,2021).Theincreaseinfinancialauthoritiesconcernove
174、rcybersecurity threats is also mirrored by market participants.The Global COVID-19 Fintech Market Impact and Industry Resilience Studysurveyedfintechfirmsandreportedanincreaseincybersecurityattacks,especiallyinretail-facingactivities,whichsawayear-on-yearincreaseof7%in2020(CCAF,WEF,and World Bank,20
175、22).To combat the increaseinthreats,33%ofmarketparticipantssurveyed made changes to their services to enhance their cybersecurity features(CCAF,WEF,and World Bank,2022).Enhancing cybersecurity features increased the costofcybersecurityforfirmsinEMDEsby17%andby16%inadvancedeconomies(CCAF,WEF,andWorld
176、Bank,2022).Itisnoteworthythat11%of market participants reported using regulatory support initiatives provided by regulators that related to cybersecurity and fraud prevention.Of those,39%considerthattheregulatorysupportinitiativesweresufficient,while26%statedtheyneed more support from regulators to
177、standardize cybersecurity and fraud prevention(CCAF,WEF,and World Bank,2022).Respondentswereaskedwhetherfintechwassupportiveorharmfulintheireffortstoachievetheirpolicyobjectivesduringthepandemic.Figure3.7summarizesthesefindings.Thetopthreeobjectiveswhererespondentsconsiderthatfintechhasapositiveimpa
178、ctareDFSadoption(reportedby88%ofrespondents),financialinclusion(87%),andmarketdevelopment(85%).Farfewerrespondentsconsiderthatfintechhasnegativelyaffectedtheirabilitytoachievetheirobjectives,butitisnotablethat29%ofrespondentsreportedpossiblenegativeimpactsinconsumerprotection,followedbyfinancialstab
179、ility(18%),andmarketintegrity(18%).Figure 3.7:Perceived impact of fintech on regulatory objectives due to Covid-19Percentage of respondents20050100900Consumer protection (N=123)Financial stability (N=122)Promoting competition (N=118)Financial inclusion(N=123)Market integrity (N=120)Market
180、 development (N=123)Adoption of digital financial services(N=122)46%43%75%87%46%85%88%29%18%18%20%37%10%8%34%7%4%5%13%5%6%Supportive Potentially harmful Neither supportive nor harmful Not a regulatory objective3%3%2%2%2%2%2%3.Medium-termimpactofCovid-1928Comparedtothefindingsofthe2020survey,morefina
181、ncialauthoritiesbelievethatfintechsupportstheirobjectiveofconsumerprotection(46%in2022versus38%in2020).However,thenumberoffinancialauthoritiesthatareconcernedthatfintechcouldhindertheirconsumerprotectioneffortsalsoincreased(29%in2022versus13%in2020).Inlookingatthemedium-termimpactofthepandemiconregu
182、latoryobjectives,thenumberofrespondentswhohaveapositiveviewoffintechsroleinconsumerprotection,DFSadoption,financialinclusion,andmarketdevelopmenthasincreased.Thereis,however,ariseintheminoritywhoconsiderthatfintechmaypotentiallyharmeffortstoprotectconsumers.Consumerprotectionisdiscussedindetailin Ch
183、apter 4.3.3 Challenges due to the impact of Covid-19The Rapid Assessment Studyin2020providedanoverviewofthechallengesregulatorsandsupervisorsfacedasaconsequenceofCovid-19.TwoyearsaftertheWorldHealthOrganizationdeclareditapandemic,itwaspertinenttodeterminewhetherthesechallengeshadchangedinthemediumte
184、rm.Figure 3.8 illustrates that 61%ofrespondentsexperiencechallengesinconductingsupervisoryvisitsbecauseofCovid-19,upfrom49%in2020.Itisstillthetopchallengein2022,asitwasin2020.Forty-onepercentofrespondentsconsiderreprioritizationofresourcesachallenge,upfrom25%in2020.Figure 3.8:Internal challenges to
185、developing regulatory responses to fintech(N=125)Broadly,authorities across the regions ranked the risks similarly.More respondents in South Asia reported conductingsupervisoryvisits(83%)asachallengecomparedtothoseinotherregions.0600Other challengesInternational coordinationInternal commu
186、nications and coordination Delayed response from other public organizations IT challenges of remote working Difficulty in performing core actionsReprioritization of resourcesDomestic coordinationAccess to accurate and/or timely data Increase in requests from consumersLack of clear remitReduced capac
187、ity due to remote working Increase in regulatory requestsChallenges in supervisory visits 6%10%23%21%24%26%41%20%24%21%25%36%30%61%Percentage of respondentsNote:Respondentscouldchoosemultipleresponses.The 3rd Global Fintech Regulator Survey293.4 The impact of Covid-19 on regulatory innovation initia
188、tivesFinancial authorities have been responding to the opportunitiesandchallengesoftechnology-enabledfinancialinnovationbydevelopingregulatoryinnovation initiatives.These include innovation offices,regulatorysandboxes,innovationaccelerators,and suptech applications.InrecentregionalreportsonSSA,MENA,
189、andAPAC,thenumberofjurisdictionswithatleastoneinnovationofficeincreasedfrom15in2019to37in2021(CCAF,2021a,2022a,2022b).Similarly,the numberofjurisdictionswithatleastoneregulatorysandbox increased from 21 in 2019 to 46 in 2021.The development of other regulatory innovation initiatives,such as digital
190、sandboxes and innovation accelerators,also increased.Covid-19ledtosomerespondentschangingtheir approach in relation to their regulatory innovation initiatives.In terms of innovation officesandregulatorysandboxes,35%and31%ofrespondents,respectively,introducedanewinitiative or accelerated an existing
191、one during thepandemic.Itisalsonotablethatfor55%ofrespondents,the pandemic impacted their suptech initiatives,with17%modifyingtheirplannedinitiative to integrate the lessons they had learned since the start of the crisis.AfargreaterproportionofrespondentsinEMDEschanged their approach to their regula
192、tory innovationinitiativesduetoCovid-19,comparedto those in advanced economies.As illustrated in Figure3.9,just16%ofrespondentsinadvancedeconomieswithaninnovationofficeconsidersthatCovid-19impactsitsoperation,comparedto66%inEMDEs.Thisdifferenceisalsoobservedforregulatorysandboxes(26%inadvancedeconom
193、iesversus66%inEMDEs)andsuptechinitiatives(38%inadvancedeconomiesversus64%inEMDEs).So,whiletherapidincreaseinregulatoryinnovationinitiativesmightbroadlybewelcomed,EMDErespondents experience greater challenges in developing such initiatives.Figure 3.9:Impact of Covid-19 on regulatory innovation initia
194、tives emerging market and developing economies vs advanced economiesFigure3.9alsoillustratesthat,inresponsetotherapiddigitalizationoffinancialservicescausedbythepandemic,financialauthoritiesinEMDEshavemainlyintroducedneworacceleratedplannedinitiatives.Forexample,while15%ofEMDErespondentsdelayedplann
195、edregulatorysandboxinitiativesduetoCovid-19,33%acceleratedtheirplans.Percentage of respondentsNote:Respondentsthatansweredtheydidnothavetheinitiativeintheirjurisdictionarenotincluded20050100900Suptech initiativeDigital sandboxInnovation acceleratorRegulatory sandboxInnovation office9%15%9
196、%16%10%26%17%17%33%32%10%10%15%10%8%16%13%11%11%6%6%9%9%15%10%8%17%7%8%13%4%4%4%36%55%53%34%34%62%80%77%74%84%Introduced new initiative(s)Accelerated planned initiative(s)Delayed planned initiative(s)Modified planned initiative(s)No change to initiative(s)3%AEs(N=29)AEs(N=10)AEs(N=13)AEs(N=33)AEs(N=
197、26)EMDEs(N=55)EMDEs(N=29)EMDEs(N=34)EMDEs(N=58)EMDEs(N=50)3.Medium-termimpactofCovid-1930In this regard,one respondent commented:“Covid-19 indeed catalyzed digitalization in our jurisdiction.It is a positive development but one that has placed a lot of pressure on regulators not only in the financia
198、l sector.The urgency for suptech cannot be overemphasized.Partners such as CCAF have benefited our financial authority in terms of capacity building,resource reserve and thought leadership.We hope for more initiatives that will help bridge the gap from a regulatory infrastructure standpoint.”Thechal
199、lengesduetoCovid-19thatjurisdictionswithregulatoryinnovationinitiativesarefacinginthe medium term have evolved from the immediate challenges reported in The Rapid Assessment Study.Overhalf(52%)oftherespondentsstatedthatdelivering an initiative at speed is a major challenge.Externalcommunications,whi
200、chwasthemainissuein2020(reportedby43%ofrespondents),isstillanimportantchallengein2022for38%ofrespondents.Perhaps due to the lessons learned duringthefirsttwoyearsofthepandemic,thechallenge of domestic coordination(reported by 43%ofrespondentsin2020)decreasedto23%in2022.Generally,financialauthorities
201、inEMDEsfacedmore challenges in developing regulatory innovation initiatives during the pandemic than those in advanced economies.Figure 3.10 illustrates that 60%ofEMDErespondentsciteddifficultyindeliveringaninitiativeatspeed,comparedto33%in advanced economies.Another notable difference isthatalmosto
202、neinthree(32%)respondentsinEMDEsexperiencechallengesincoordinatingwithdomesticauthorities,comparedtojust3%inadvanced economies.Conversely,respondents in bothadvancedeconomiesandEMDEsreporteddifficultiesinexternalcommunications,at38%.Figure 3.10:Challenges in developing regulatory innovation initiati
203、ves emerging market and developing economies vs advanced economies0600Difficulty in delivering initiative at required speedDomestic coordinationDifficulty in external communicationsOther challengesDifficulty in internal communications High demand for regulatory innovation initiativesAvail
204、ability/reprioritization of funding or resources Availability of necessary technologyInternational coordination8%5%10%33%3%21%28%38%33%16%17%18%24%32%34%36%38%60%Percentage of respondentsNote:Respondentscouldchoosemultiplechallenges.Emerging market and developing economies(N=87)Advanced economies(N=
205、39)4.Consumer risk and protection 4.Consumer risk and protection324.Consumer risk and protectionThepreviouschaptersetoutthemedium-termimpactofCovid-19onfinancialregulatorsandsupervisorsglobally.Itoutlinedhowfinancialauthoritiesprioritizationandperceivedbenefitsoffintech/DFShavechangedsince2020,andth
206、echallenges they experienced in regulating and supervisingfintechactivities.Thischapterdiscusseschallengesassociatedwithfinancialauthoritiesperceptionsof,andresponsesto,emerging and exacerbated consumer risks relatedtotheincreasingadoptionoffintech/DFSwithinandacrossjurisdictions,aswellasthoserelate
207、dtothepandemic.Thisbuildsonthefindingsof The Rapid Assessment Study,whichreportedgrowingconcernsamongfinancialauthoritiesregardingDFS-relatedconsumerrisks,particularlydue to the pandemic.Financial consumer protection(FCP)encompasses thelaws,regulations,andinstitutionsthatensureconsumerssafetywhenusi
208、ngfinancialservicesand products.An effective FCP regime ensures thatusersoffinancialproductsandservices,bothpotentialandcurrent,canmakewell-informeddecisions.Italsosupportsfinancialauthoritieswideraimsofincreasingfinancialstability,financialintegrity,andfinancialinclusion(WorldBank,2012).DFSconsumer
209、riskisdefinedasaconditionorfactor that exposes a consumer to potential or actualharmorloss(bothfinancialandnon-financial)whileusingDFS(CGAP,2022).ArecentstudybyCGAPidentifiedsixty-sixtypesofconsumerrisksand grouped them into four broad risk types:fraud,data misuse,lack of transparency,and inadequate
210、 redressmechanisms.Italsoidentifiedtwocross-cutting risk types related to agent issues and networkdowntime(CGAP,2022).DFSandfintechadoptionhasgrownduringCovid-19,andwhilethishashadsomepositiveimpacts(CCAFandWorldBank,2020;FuandMishra,2020;OECDandG20,2021),certainexisting consumer risks have been exa
211、cerbated andnewonesintroduced.Thepandemichasalsoheightenedexistingandintroducednewconsumerrisks,including cybersecurity,data privacy,fraud and scams,business failure,algorithmic bias,predatory lending practices,and other market conduct risks.The increase in size and relevance of the digital assets a
212、nd cryptocurrencies markets in some jurisdictions has also led to a greater focus on consumer risk and protection regarding digital assets.Regulators,supervisors,and other institutions in the global regulatory arena have been buildingonpreviousassessmentsoffintech-relatedissues,presentedbelow,andhig
213、hlightingintheseassessmentsthattheacceleratedadoptionofDFSissettocontinue(OECDandG20,2021).Widespread concerns about factors that maycontributetoheightenedfintech-relatedconsumer risks are still being reported.At a high level,there are concerns regarding data gaps in severalfintechverticals,asitispe
214、rceivedthesewillpreventthenecessaryassessmentofriskstofinancialconsumersandfinancialstabilitymoregenerally(CGAP,2022;FSB,2022b).Concernsaboutnewandobscurefintechbusinessmodels,and consumers inexperience and limited understandingofnewofferingshavealsobeenraised(WorldBank,2021a).Likewise,regulatorsand
215、 international bodies are still concerned about unclearregulatoryperimetersandremits,whichmight increase fraud and generate issues related to productunsuitability,especiallyfornewproductsandservices(OECDandG20,2021;WorldBank,2021a,2022b).Fintechfirmspresentadistinctchallengeforfinancialauthoritiesin
216、theireffortstoidentify,measure,prioritize,andaddressfintech-related consumer risks,as their activities typically fall outside existing regulatory and supervisory frameworks,bothforconsumerprotectionandprudentialsupervision,whichmayresultininsufficientregulationandsupervision(WorldBank,2020c).Aswella
217、sthesehigh-levelconcerns,thereisalsoagreaterfocusonspecificissues.Forexample,digitalassets and cryptocurrencies have come under closerscrutinybothfrommicro-prudentialandmacro-prudentialperspectives(FSB,2019,2022a;ECB,2022;IMF,2022).Alsounderthespotlightarerisksrelatedtodigitalinfrastructure,whichoft
218、enarenotdirectlywithintheremitoffinancialauthoritiesandwillrequiregreatercoordinationThe 3rd Global Fintech Regulator Survey33among different government agencies(FSB,2017a,2017b,2018b;IOSCO,2017,2021;BCBS,2018;World Bank,2022b).Similarly,antitrust-relatedconcerns,especiallyregarding the increasing p
219、resence of bigtech in fintech,havealsobecomepartofthefocus(Arneretal.,2022a;Bains,Sugimoto,andWilson,2022;FSB,2022b).Finally,there are still concerns regarding more mature verticals,such as platform finance,wheretheseplatformshaveexpandedto become more relevant from a prudential perspective.Forinsta
220、nce,consumerswhoborrowthrough this channel may be at risk from imprudent lending(World Bank,2021a).4.1 Regulatory mandate for financial consumer protectionTheG20high-levelprinciplesonfinancialconsumerprotection recommend that jurisdictions establish oversightbodies(dedicatedornot)withanexplicitmanda
221、teforfinancialconsumerprotection(OECD,2011).Thefindings,illustratedinFigure4.1,summarizethe approaches relating to consumer protection mandatesadoptedbythefinancialauthoritiessurveyed.Thefindingsshowthat,typically,multipleagencieshavemandates/authorityforfinancialconsumerprotection.Sixty-twopercento
222、f respondents indicated that multiple agencies intheirjurisdictionhaveoverlappingmandates/authorityforconsumerprotection,withaminority(38%)reportingonlyoneregulatorwiththismandate.Fifty-eightpercentreportedthatcentralbankshaveamandate/authorityforconsumerprotection.Otherregulatorsandsupervisorswitha
223、 consumer protection mandate are securities regulators(reportedby37%)orotherfinancialauthorities(31%).Additionally,54%ofrespondentsindicated that consumer protection agencies also have mandates,either as a general consumer protectionagency(reportedby42%)oraspecificfinancialconsumerprotectionagency(1
224、2%).Only19%haveanombudsmanwithremitoverfinancialconsumer protection.This fragmentation over consumer protection requires coordination both to minimize duplication of efforts and ensure that consumer risks are being adequately addressed by the relevant agency(World Bank,2012).In this regard,one respo
225、ndent had this recommendation:“For effective regulation of fintech,it is highly advisable to adopt joint regulation since the players fall under multiple financial sector regulatory authorities.”Figure 4.1:Authorities with a mandate for financial consumer protection(N=127)403020105060Percentage of r
226、espondents0Central bankGeneral consumer protection agency OmbudsmanOther financial services regulator 2%NoneSecurities regulatorFinancial consumer protection agency Other authority42%37%31%58%25%19%12%Note:Respondentscouldselectmultipleresponses.4.Consumer risk and protection344.2 Covid-19 and consu
227、mer risksConsumer protection is one of the top three risks that respondents consider has increased during Covid-19,citedby52%,asFigure3.6illustrates.Seventy-onepercentoffinancialauthoritiesindicatedthatCovid-19hasincreasedexistingfintech-relatedconsumerrisks,withmoreEMDErespondentsreportingthisincre
228、ase(75%)comparedtothoseinadvancedeconomies(64%).Thefindingisconsistentacrosscentralbanksandotherfinancialauthorities.Intermsofcross-regionalfindings,over50%of respondents across all regions consider that Covid-19hasincreasedfintech-relatedconsumerrisks.ThetopthreeregionsareLAC(reportedby83%ofrespond
229、ents),SSA(81%),andEuropeandCentralAsia(59%).Figure4.2illustratestherelationshipbetweenrespondentsperceptionoffintech-relatedrisksandtheirprioritizationoffintech/DFSduringthepandemic.Fifty-sevenpercentofthosewhohadnotedanincreaseintheimportanceoffintech/DFSduringthepandemicalsonotedanincreaseinconsum
230、er risk in the same period.This proportion is significantlyhighercomparedtothosewhohadnotcitedanincreaseintheimportanceoffintech/DFS(33%).Figure 4.2:Comparison of the perceived importance of fintech prioritization and perception of increased consumer risk during Covid-19Respondentswhohadnotedanincre
231、aseinconsumerrisksrelatingtofintech/DFSduringCovid-19werethenaskedtoselectspecificrisks they considered had increased.Figure 4.3 illustratesthatmostrespondents(86%)citedtherisk of fraud and related misconduct.Figure 4.3:Perceived increase of consumer risks related to fintech/DFS during Covid-19(N=90
232、)Thisfindingreflectscomparableresultsinotherrecentstudiesthatemphasizetheincreaseandsignificanceoffraudinfintech/DFS.Fraudandscamsarereportedtohaveriseninlinewiththegrowthindigitaltransactions(OECD,2022).Additionally,datafromOutseersquarterlyfraudreportsindicatesthatbetween2016and2020,fraudulenttran
233、sactionsviamobileappsincreasedby104%eventhoughthetotalnumberoftransactionshadonlyincreasedby34%(CGAP,2022).Amarkedriseinfraudulentapp-baseddigitalmicrocreditlendersduringtheCovid-19lockdownshasalsobeenreported(WorldBank,2022b).Fraudrisks,specificallythoserelatedtofinancialscamsandfrauds,werethesecon
234、dmostimportant concern for respondents in a 2020 survey of member jurisdictions of the global partnership onfinancialinclusion.RespondentswereaskedtorankvariousrisksarisingduetoCovid-19andratetheirsignificance(OECDandG20,2021).Themainareasofconcernwerephishingandfakeschemesto40302010506070 Increase
235、Remained the same Decreased0Percentage of respondentsNo change in risk during Covid-19(N=36)33%61%6%Risk increased during Covid-19(N=90)9%34%57%08060900Algorithmic biasProvider failure or insolvencyLack of protectionFinancial exclusion Technology unreliabilityFraudData lossLack of transpa
236、rency Money laundering/terrorist financingUnfair practice11%14%32%29%50%86%17%39%30%52%Percentage of respondentsNote:Respondentswereonlypromptedtoanswerthisquestioniftheyindicatedthatriskshadincreasedinapreviousquestion.Respondents could select multiple responses.The 3rd Global Fintech Regulator Sur
237、vey35persuade consumers to transfer,pay or invest money,scams linked to social media or investment platforms,andfraudtargetingrecipientsofemergencygovernmentbenefits(OECDand G20,2021).Notably,theriskofincreasedfinancialexclusionduringCovid-19wasreportedby29%ofrespondents.Thisissignificant,asfintechi
238、sfrequentlyidentified(inthisandpreviousWorldBank-CCAFstudies)asenablingthepolicyobjectiveoffinancialinclusion.ThefindingisillustratedinFigure3.7,whichshowsthat87%ofrespondentsreportedthatfintechsupportsfinancialinclusion.However,italsosuggeststhataminoritybelievesitcouldleadtofinancialexclusion.Fina
239、ncialexclusioncouldariseduetofactorssuchaslackofdigitalaccesstofinancialproductsandservicescausedbyconnectivityissues,lackofdigitalliteracy/capability,especiallyamongcertaingroups(forexample,low-incomehouseholdsandseniorcitizens),orexcessivedataprofilingleadingtofinancialexclusion(OECDandG20,2021).4
240、.3 Emerging consumer risks related to fintech/DFSAswellasidentifyingexacerbatedexistingrisks,itisnecessarytoevaluatewhetherthegrowthinfintechandDFSadoptionintroducedemerging consumer risks,irrespective of the pandemic.Sixty percent of allrespondentsstatedthiswasthecase,withsimilarproportionsbeingrep
241、ortedbythoseinEMDEs(61%)andadvancedeconomies(56%).Figure4.4showsthatfinancialauthoritiesinallregionsidentifiedemergingconsumerrisksrelatedtofintech/DFS,particularlythoseinSSA(78%).Figure 4.4:Identified emerging consumer risks related to fintech/DFS regional breakdown(N=123)Respondentswhoidentifiedem
242、ergingconsumerriskswereaskedwhattheyattributedthesenewrisksto,andwhathasintensifiedthem.Figure4.5illustratesthatthecategorywheremostnewriskswereidentified(by73%ofrespondents)isnewdigitalassetclasses(forexample,cryptoassets,stablecoins,andnon-fungibletokens(-NFTs).Thisareaofconcernisexploredinmoredet
243、ailinSection4.4,whichsetsouttheperceptionoftheseverityofrisksinthisvertical.Over60%ofrespondentsidentifiednewconsumerrisksinothercategories,suchasnewchannels(68%),newactors(64%),newbusinessmodelsandactivities(64%),andnewtechnologies(64%).Figure 4.5:Categories in which new consumer risks relating to
244、fintech/DFS were identified(N=75)050600East Asia and Pacific(N=20)Latin America and the Caribbean(N=24)Middle East and North Africa(N=14)Sub-Saharan Africa(N=32)South Asia(N=6)Europe and Central Asia(N=27)52%50%50%42%40%22%48%50%50%58%60%78%Percentage of respondents Identified emerging co
245、nsumer risks Did not identify emerging consumer risks080600Other emerging consumer risksNew technologies New digital asset classes New actors in the fintech ecosystem New business models and activities New channels for providing fintech/DFS 8%64%73%64%64%68%Percentage of respondentsNote:R
246、espondentswereonlypromptedtoanswerthisquestioniftheyindicatedthatriskshadincreasedinapreviousquestion.Respondents could select multiple responses.4.Consumer risk and protection36Aswellasidentifyingthesource of emerging consumerrisks,respondentswerealsoaskedtoidentify factors that had intensified the
247、se risks.The leadingfactors,identifiedby77%ofrespondents,are regulatory or supervisory challenges due tonewtechnologiesandbusinessmodels,andfinancialauthoritieslowcapacity/understandingofconsumer risks,as illustrated in Figure 4.6.Thisisfollowed(at69%)byincreasedfinancialinterconnectedness resulting
248、 in increased operationalrisks,suchascyberrisksandfinancialstability risks.In third place is the impact of social 10RefertoquestionB4inthequestionnaire.Thesurveyinstrumentcanbeviewedusingthislink:https:/ example,promotions by celebrities,influencers,andotherformsofdigitalconsumerengagement,reportedb
249、y61%ofrespondents.Theroleofnewactorsinintensifyingconsumerriskis highlighted by one respondents comment:“The increased use of third-party service providers may exacerbate operational/cyber risks.”Figure 4.6:Perceived factors intensifying consumer risks related to fintech/DFS(N=75)4.4 General level o
250、f consumer risks across fintech verticalsRespondentswereaskedabouttheirperceptionof the general level of consumer risks that variousfintechverticalsposeintheirjurisdiction.Respondentswerenotrequiredtorankthefintechverticals in terms of risk,but their responses indicate their opinions regarding the a
251、reas of greatestconcernregardingfintech-relatedconsumer risks.10Inlinewiththeresultsoutlinedintheprevioussection,Figure4.7confirmsthatthemainareaoffocusforfinancialauthoritiesregardingconsumerrisk is digital assets and cryptocurrencies.Four timesasmanyrespondentsclassifiedrisksassociatedwithdigitala
252、ssetsandcryptocurrenciesasveryhigh(31%)comparedtootherrisktypes.Thisisfollowedbythedigitallendingandequitycrowdfunding/digitalcapitalraisingverticalsat8%and6%,respectively.While perceptions of consumer risks are generally similaracrossadvancedeconomiesandEMDEs,financialauthoritiesinadvancedeconomies
253、seemless concerned about risks from segments such asdigitalsavingsanddeposits(61%inadvancedeconomiesclassifieditasveryloworlowcomparedto32%inEMDEs),digitalbanks(52%inadvancedeconomiesclassifieditasveryloworlowcomparedto29%inEMDEs),andequitycrowdfunding/digitalcapitalraising(40%inadvancedeconomiescla
254、ssifieditasveryloworlowcomparedto20%inEMDEs).080600Other factorsExisting regulatory frameworks not fit for purpose Increased financial interconnectedness resulting in increased operational risksNew technologies,business models and consumer risks not clearly understood Speed of transaction
255、sTransnational service providersImpact of social media7%57%69%77%59%59%61%Percentage of respondentsNote:Respondentswereonlypromptedtoanswerthisquestioniftheyindicatedthatriskshadincreasedinapreviousquestion.Respondents could select multiple responses.The 3rd Global Fintech Regulator Survey37Figure 4
256、.7:Perceptions of consumer risk level by fintech vertical11RefertoquestionsB5B8inthequestionnaire.Thesurveyinstrumentcanbeviewedusingthislink:https:/ regarding the severity of various categoriesofconsumerriskswithinspecificverticals,asdiscussedinthesectionsbelow.114.4.1 Severity of consumer risks in
257、 digital assets/cryptocurrenciesDigitalassetsrefertodigitalinstrumentsordigitalrepresentationsofvalue,whichareoftenrepresented using distributed ledger technology.Examples include security tokens,utility tokens,paymenttokens,stablecoins,andNFTs.Thedigitalassetsmarkethasgrownrapidlyinrecentyears,with
258、theoverallmarketcapitalizationofcryptocurrenciespeakingatmorethanUSD3trillioninNovember2021(Statista,2022).Oneofthe primary use cases for digital assets is as a means ofpayment,wheredistributedledgertechnologyenablesfaster,cheaper,andmoreefficientpayments(BIS,2018a).Figure 4.8 indicates the perceive
259、d severity of consumerriskswithrespecttodigitalassetsandcryptocurrencies.Thekeyrisk(with34%ofrespondentsclassifyingitasveryhigh)relatestoconsumerlossduetopricevolatility,whichis documented in digital asset markets across differentjurisdictions.Thisisfollowedbyconcernsregarding lack of protection or
260、inadequate redressmechanisms,andAML/CFT,with27%ofrespondents classifying both these risk types as veryhigh.Thisalignswithstudiesontheincreaseindigitalassets-basedcrimesthatfollowedtherisein digital assets use more generally(Chainalysis,2022).Other issues,such as fraud,unfair practices,and lack of co
261、mplaint or redress mechanisms,are alsoclassifiedaseitherveryhighorhighbymostrespondents.Therisksrelatedtofinancialexclusionareperceivedasbeingsomewhatlower.Percentage of respondents20050100900Insurtech(N=76)Digital banks(N=86)Digital assets/cryptocurrencies(N=99)Wealthtech(N=78)Digital sa
262、vings and deposits(N=98)Equity crowdfunding and digital capital raising(N=84)Digital payments(N=111)Digital custody service providers(N=83)Digital lending(N=100)31%5%4%1%26%18%16%13%18%10%4%16%6%23%17%23%34%27%37%30%30%15%22%18%29%5%7%11%9%4%12%12%16%30%16%14%8%38%36%Very high High Medium Low Very l
263、ow Unsure3%3%3%6%17%24%24%15%11%27%8%19%22%9%18%4.Consumer risk and protection38Figure 4.8 Perceived severity of consumer risks in digital assets/cryptocurrenciesThesefindingsreflecttherecentfocusoffinancialauthoritiesandstandard-settingbodies.Previous assessments regarding digital assets and crypto
264、currencies have largely been exploratory and aimed at understanding the different emerging classesofassets,consumerprofilesandexposures,interconnectionwithtraditionalfinance,andthepotentialriskstofinancialstability(FSB,2017a,2017b,2018b;BIS,2018a).Significantdatagapsandthedifficultiesposedbytherapid
265、lyevolvingsectorhavealsobeenunderlined(BIS,2021a;FSB,2022a;WEFandWhartonBlockchainandDigitalAsset Project,2022).Giventheseveritywithwhichfinancialauthoritiesregard consumer risks in digital assets and cryptocurrencies,a brief analysis of the typical regulatory approaches to digital assets is warrant
266、ed.Figure4.9illustrateswhetherdigitalassets are permitted,unregulated,banned,or subjecttootheractionsinEMDEsandadvancedeconomies.Figure 4.9:The regulatory approach to digital assets emerging market and developing economies vs advanced economiesJurisdictions in advanced economies are much more likely
267、 to permit digital assets(reported by 42%ofrespondents)comparedtothoseinEMDEs(17%).Furthermore,just4%ofrespondentsinadvanced economies have banned digital assets comparedtoasignificantlyhigherproportionofrespondentsinEMDEjurisdictions,at18%.Several factors may be driving these different approaches.F
268、irstly,digital assets are considered riskierbyrespondentsinEMDEscomparedtothoseinadvancedeconomies.However,thisdifferencedoesnotappeartobesignificant,with59%ofrespondentsinEMDEsindicatingdigitalassetconsumerrisksasveryhighorhighcomparedto51%ofrespondentsinadvancedeconomies.Percentage of respondentsN
269、ote:Respondentswhoansweredthatthisisnotintheirremitareexcluded.20050100900Insufficient liquidity of counterparties(N=91)Financial exclusion(N=90)Lack of transparency(N=91)Provider failure or insolvency(N=90)Unsuitable or unfair practices(N=91)Lack of protection or inadequate redress mecha
270、nisms(N=92)Consumer loss due to price volatility(N=91)Data loss due to DFS provider failure to safeguard customer personal data(N=88)Fraud and related misconduct(N=91)Platform/technology unreliability(N=93)Lack of complaint or redress mechanisms(N=88)Money laundering and terrorist financing risk(N=8
271、6)26%27%27%34%25%25%17%16%21%19%18%25%22%28%22%28%25%34%23%19%17%17%29%13%21%10%16%10%20%16%12%13%9%16%16%11%12%13%13%14%11%9%14%21%18%16%13%6%6%6%7%8%5%19%17%17%18%28%27%16%17%16%22%29%25%Very high High Medium Low Very low Unsure15%3%3%3%3%2%2%Percentage of respondents20050100900Advanced
272、 economies(N=37)EMDEs(N=70)18%4%15%39%29%42%17%36%Banned Other action Permitted UnregulatedThe 3rd Global Fintech Regulator Survey39A second factor may be resource and capacity constraints.Financial authorities in advanced economies are likelytohavemoreresourcesandgreatertechnicalcapacitythanthosein
273、EMDEstodevelopregulatoryframeworksfordigitalassets.Therefore,withfewerresourcesandahigherperceptionoftherisks,financialauthoritiesinEMDEsaremorelikelytobandigitalassets.Digital assets regulation the approach of the Philippines Securities and Exchange CommissionThedigitalassetssectorhasgrownrapidlyin
274、recentyears,resultinginincreasedattentionfromfinancialauthorities on the implications for consumer protection,as discussed in Section4.4.1.However,the regulation of digital assets may be complicated by the lack of a universally accepted taxonomy and anunclearregulatoryperimeterwhich,togetherwiththed
275、ecentralizednatureofdigitalassets,hasled to a variety of regulatory responses globally.Forexample,somefinancialauthoritieshavedevelopedtailoredregulatoryframeworksfordigitalassets,whileothersclassifythemunderexistingsecuritieslaws.Withthepermissionofthe Securities and Exchange Commission(SEC)Philipp
276、ines,theirspecificapproachtoregulatingdigitalassetsisoutlinedbelowasanexample.The SEC Philippines currently permits security tokensunderapre-existingframework.Initsresponse to this survey,the SEC Philippines indicated that it considers unsuitable or unfair practices,fraud and related misconduct,and
277、loss due to price volatility as the largest risks posed toconsumersbydigitalassets/cryptocurrencies.It is therefore currently developing a regulatory frameworkwiththreekeyobjectivesfordigitalassetswhicharedeemedassecurities.1 Protecting investorsTheframeworkisintendedtoestablishlegalandregulatory ce
278、rtainty,particularly for investors.It willprovideminimumstandardsforcomplianceand mandate that only duly licensed or authorized persons can provide investment services to thepublicaswellasensurethatonlyregisteredsecurities can be offered.2 Ensuring that markets are fair,efficient,and transparentThef
279、rameworkseekstofacilitateatransparentapproach.Digitalassetexchangeswillbeaccountable for the products they offer investors and must also submit relevant information to the SEC for assessment.3 Reducing systemic riskAssessing and identifying systemic risks in digital assetsandserviceproviderswillenab
280、letheregulator to more effectively manage risks by determining the necessary capital requirements and implementing other prudential requirements.4.4.2 Severity of consumer risks in digital payments and international remittancesInthedigitalpaymentsandinternationalremittancessector,therisksmostoftenpe
281、rceivedasveryhigharefraudandrelatedmisconduct(14%),closelyfollowedbyanotherriskofconcerntoregulators,thatofAML/CFT(12%)12andfinancialexclusion(9%),asillustratedinFigure4.10.Interestingly,respondentsalsoindicated consumer protection risks concerning lack of protection or adequate redress mechanisms,l
282、ack of transparency,andproviderfailureorinsolvencyasveryloworlow.Itisworthhighlightingthatthereisgrowingliteratureconcerningrisksfromfintech/DFSprovidersoperating across different jurisdictions.One example is the early insolvency cases regarding digital assets and cryptocurrencies intermediaries due
283、 to the uncertainty surrounding consumers potential claims over assets(WorldBank,2021a,2022b;CliffordChance,2022).Butastheseinsolvencyproceedingshavesofar been concentrated in a handful of jurisdictions,it is possible that most regulators and supervisors have yet to be impacted by them and other thr
284、eats that have not yet spread.12AML/CFTmaynotbeconsideredaconsumerriskbutwasincludedforcomparisoninthischapterasitisrecognizedasakeyregulatory concern based on findings from past reports.4.Consumer risk and protection40Figure 4.10:Perceived severity of consumer risks in digital payments and internat
285、ional remittances4.4.3 Severity of consumer risks in digital lendingThe perceived severity of risks is more evenly distributed in the digital lending sector.Figure 4.11 suggests thattheonlyoutlierisproviderfailureorinsolvency,wheretherisksareperceivedasverylowby16%ofrespondentsandlowby19%.Interestin
286、gly,thepercentageofrespondentswhoareunsureabouttheseverityofrisksindigitallendingishigherthanintheotherverticals(exceptequitycrowdfundinganddigital capital raising).This suggests there may be data gaps or other challenges that need to be addressed tosupportfinancialauthoritiesintheireffortstoappropr
287、iatelyidentify,prioritize,andmitigaterisksinthisvertical.Figure 4.11:Perceived severity of consumer risks in digital lendingPercentage of respondentsNote:Respondentswhoansweredthatthisisnotintheirremitareexcluded.20050100900Platform/technology unreliability or vulnerability(N=109)Lack of
288、protection or inadequate redress mechanisms(N=108)Fraud and related misconduct(N=110)Provider failure or insolvency(N=105)Lack of transparency(N=108)Financial exclusion(N=108)Data loss due to DFS provider failure to safeguard customer personal data(N=106)Unsuitable or unfair practices(N=109)Money la
289、undering and terrorist financing risk(N=105)14%12%9%8%6%5%21%15%17%17%18%14%18%7%12%35%24%27%28%25%25%33%18%27%15%28%26%25%23%34%30%30%32%8%8%9%13%10%16%7%23%13%7%13%11%10%9%10%16%15%14%Very high High Medium Low Very low Unsure3%3%4%Percentage of respondentsNote:Respondentswhoansweredthatthisisnotin
290、theirremitareexcluded.20050100900Insufficient liquidity of platforms(N=89)7%14%26%17%11%25%Fraud and related misconduct(N=93)8%23%27%17%6%19%Lack of protection or inadequate redress mechanisms(N=91)8%22%26%14%9%21%Risk of loss for P2P lenders(N=89)9%21%26%12%6%26%Lack of transparency(N=91
291、)9%23%24%17%8%19%Very high High Medium Low Very low UnsureUnsuitable or unfair practices(N=93)22%31%14%6%16%11%Provider failure or insolvency(N=89)16%20%19%16%26%3%Data loss due to DFS provider failure to safeguard customer personal data(N=90)5%18%22%23%8%24%Financial exclusion(N=93)5%15%28%19%10%23
292、%Platform/technology unreliability or vulnerability(N=91)6%15%28%16%10%25%Data and algorithmic bias leading to unfair,discriminatory or biased outcomes(N=90)6%10%22%23%10%29%The 3rd Global Fintech Regulator Survey414.4.4 Severity of consumer risks in equity crowdfunding and digital capital raisingTh
293、e severity of the risks reported for equity crowdfundinganddigitalcapitalraising,asillustrated in Figure 4.12,resemble those for digital lending.A high percentage of respondents are unsureabouttheseverityoftherisks,withsimilarproportions being reported across the risk types.13 This involves monitori
294、ng developments or activities in the fintech market more generally.As highlighted in the discussion on digital lending,this uncertainty may suggest data gaps or other challenges that need to be addressed to support financialauthoritiesinidentifying,prioritizing,andmitigatingrisksinthisvertical.Itisa
295、lsoworthnotingthat respondents consider the risk of data loss due to providers failing to safeguard consumer data as verylow(4%)orlow(27%).Figure 4.12:Perceived severity of consumer risks in equity crowdfunding and digital capital raising4.5 Identifying,measuring,and prioritizing fintech-related con
296、sumer risksRespondentsareusingdifferentanalyticalmethodstoidentify,measure,andprioritizefintech-relatedconsumer risks,as illustrated in Figure 4.13.The most frequently cited are market monitoring(reported by76%ofrespondents),13analyzingconsumercomplaints(72%),andonsiteinspections/supervisoryvisits(6
297、3%).Figure 4.13:Analytical methods used by regulators to identify,measure,and prioritize fintech-related consumer risks(N=123)Percentage of respondentsNote:Respondentswhoansweredthatthisisnotintheirremitareexcluded.20050100900Platform/technology unreliability or vulnerability(N=70)Data lo
298、ss due to DFS provider failure to safeguard customer personal data(N=70)Provider failure or insolvency(N=68)Unsuitable or unfair practices(N=70)Fraud and related misconduct(N=70)Lack of protection or inadequate redress mechanisms(N=68)Lack of transparency(N=70)Risk of loss for investors(N=68)Insuffi
299、cient liquidity of platforms(N=69)Limitations on transferability(N=69)10%12%10%7%6%9%7%7%7%13%19%13%18%19%14%17%19%16%10%20%22%16%12%13%19%16%16%23%14%14%19%19%15%18%16%27%20%23%23%6%6%6%4%4%4%4%6%35%34%34%34%31%35%34%36%35%36%Very high High Medium Low Very low Unsure6%6%6%08060900Other m
300、ethodsAssessment of consumer investment lossesData from other jurisdictionsSectoral analysis of conduct breachesOnsite inspections/supervisory visitsMarket monitoringHorizon scanning researchIndustry consultationsConsumer surveysAnalysis of consumer complaints 11%15%37%28%63%76%23%50%31%72%Percentag
301、e of respondentsNote:Respondentscouldselectmultipleresponses.4.Consumer risk and protection42Guidancefrominternationalbodieswasalsousefulin assessing consumer risks,as illustrated by a respondentfromLAC:“The IMF/World Bank Bali Fintech Agenda has helped us assess emerging consumer risks and balance
302、them against the potential benefits,including when it comes to collaboration among regulators domestically and internationally.”4.6 Challenges in identifying,measuring,and prioritizing consumer risksRespondents reported various challenges in identifying,measuring,andprioritizingfintech-relatedconsum
303、errisks.Eachofthetopfivereportedchallengeswasselectedbymorethanhalftherespondents.Poorqualitydataand/orinsufficientdataareidentifiedby68%ofrespondents.Thiscomplementsthefindingsrelatedto capacity building needs,indicated in Figure 7.1,whichhighlightsthatsomeoftheareaswheretechnical support is most n
304、eeded relate to data processing and analytics,and data collection.Challenges related to data gaps may be partly duetoinstanceswhereajurisdictionsexistingregulatory reporting requirements do not extend tosomefintechsortheiractivities.Datagapscould prevent regulators from accurately assessing thefinan
305、cialrisksposedbysuchfintechs,makingitmoredifficultforthemtodecidewhethertoextendtheregulatoryperimetertoincludefintechactivities(FSB,2022a).Unclear regulatory remits and lack of clarity on the responsibilities of each regulatorandsupervisorinjurisdictionswheremultiple authorities are involved can ex
306、acerbate this.Otherkeychallengesidentifiedbyfinancialauthoritiesincludefintech-relatedconsumerrisksbeingoutsidetheirregulatoryperimeter/remit(60%),capacityandresourceconstraints(56%),limitedknowledge/expertiseonfintech-relatedrisks(52%),andalackoforinadequatemarketmonitoringtools(50%).Significantly,
307、allchallengesarecitedmorefrequentlybyfinancialauthoritiesinEMDEsjurisdictions,asshowninFigure4.14.Thelargestreporteddifferencesbetweenthetwoeconomiesarelimitedknowledge/expertiseaboutfintech-relatedrisks(61%inEMDEsversus31%in advanced economies),inadequate reporting from supervised institutions rega
308、rding consumer complaints(42%inEMDEsversus13%inadvancedeconomies),and capacity and resource constraints(60%inEMDEsversus46%inadvancedeconomies).A respondent from SSA described their approach to dealingwiththeuncertaintyarisingfromactivitiesoutside their regulatory perimeter or remit:“We have adopted
309、 temporary measures where necessary to license those providers that require licenses to operate and opted to engage with those that are not clearly captured under any legal regime,as well as adopting administrative measures for oversight where there is a vacuum while learning from others.”The 3rd Gl
310、obal Fintech Regulator Survey43Figure 4.14:Challenges in identifying,measuring,and prioritizing consumer risks emerging market and developing economies vs advanced economies4.7 Challenges in addressing fintech-related consumer risksRespondents reported various challenges in addressingfintech-related
311、consumerrisks.Thetopchallenge,citedby60%ofrespondents,relates to capacity and resource constraints.Significantly,aswellasbeingthetopchallengeinaddressingfintech-relatedrisks,itisalsooneofthe top challenges in identifying,measuring,and prioritizing consumer risks.Challenges in regulatory frameworks,s
312、pecificallythoserelatingtoconsumerprotectionandotherframeworks,areequallynoteworthy,suggestingexistingdatagapsandtheneed for greater regulatory action.In this regard,thefindingshighlighttwoconnectedchallengesamongthetopfive:regulatoryframeworksthatareabsentornotfitforpurpose(reportedby53%ofresponden
313、ts)andgapsinfinancialconsumerprotectionregulatoryframeworks(50%).Concerningthelatter,weakconsumerprotectionstandardswithineachregulatoryorsupervisoryauthority may intensify consumer risks(World Bank,2020d).Figure4.15comparesthechallengesfinancialauthoritiesinEMDEsandadvancedeconomiesfaceinaddressing
314、fintech-relatedconsumerrisks.Allchallenges(exceptinthecategoryother)aremorefrequentlycitedbythoseinEMDEjurisdictions.The most cited challenges relate to capacity and resourceconstraints(67%inEMDEsversus44%inadvancedeconomies)andlimitedknowledge/expertiseonfintech-relatedrisks(58%inEMDEsversus28%inad
315、vancedeconomies).Capacity and resource constraints are more often citedbyrespondentsinEastAsiaandPacific(74%),SSA(68%),andLAC(63%).ThechallengeofgapsinfinancialconsumerprotectionregulatoryframeworksisalsonoteworthyandisanissueforagreaterproportionofrespondentsinSSA(58%),MENA(57%),andLAC(54%).1020304
316、0708050600Outside regulatory perimeter/remitInsufficient dataDifficulty balancing innovation/consumer protectionCapacity and resource constraintsChallenges relating to enforcementChallenges with direct consumer complaintsInadequate market monitoring toolsLimited knowledge/expertise on fintech risksI
317、nadequate complaints reporting by institutionsOther challenges15%21%13%31%36%46%31%46%54%59%8%31%42%41%51%52%61%60%62%72%Percentage of respondentsNote:Respondentscouldselectmultipleresponses.Emerging market and developing economies(N=84)Advanced economies(N=38)4.Consumer risk and protection44Figure
318、4.15:Challenges in addressing fintech-related consumer risks emerging market and developing economies vs advanced economies4.8 Responses to fintech-related consumer risksFigure4.16showstherangeofactionsthatfinancialauthoritieshaveimplementedorareplanningtoimplementinresponsetofintech-relatedconsumer
319、risks.Thefindingssuggestthatthemostpopularactionsrelatetoconsumereducationandliteracy.Seventy-fivepercentofrespondentsemployconsumereducationcampaigns/riskwarningsand,relatedly,66%provideconsumer-focusededucationalresources(financialliteracyprograms).Othermeasuresinthetopfiverelatetointroducingprohi
320、bitions/restrictionsonhigh-riskactivities(reportedby66%ofrespondents),increasingenforcementactionforbreaches(60%),andincreasingsupervisoryresourcesforoffsitemonitoring(59%).Figure4.16alsoshowstheplannedmeasurestocombatfintech-relatedconsumerrisks.ThesefindingsareconsistentwithevidencepresentedinChap
321、ter6.Thetopfourplannedactivitiesrelatetoleveragingsuptechapplications:sentimentanalysis(reportedby87%ofrespondents),chatbots(82%),socialmediamonitoring(75%),andothersuptechapplications(71%).Developingandimplementingnewfinancialconsumerprotectionregulatoryframeworksisthefifthmostselectedmeasure(66%).
322、050600Lack of remit over fintech activitiesLack of remit over fintech entitiesCapacity and resource constraintsChallenges relating to enforcementDifficulty coordinating with external domestic regulatorsOther challenges18%13%23%33%38%44%1%20%37%40%47%Absent/unfit regulatory frameworks Diff
323、iculty balancing innovation/consumer protectionGaps in financial consumer protection41%49%49%52%50%55%67%Percentage of respondentsNote:Respondentscouldselectmultipleresponses.Emerging market and developing economies(N=86)Advanced economies(N=38)28%58%Limited knowledge/expertise on fintech risksThe 3
324、rd Global Fintech Regulator Survey45Figure 4.16:Actions undertaken by financial authorities in response to fintech-related consumer risks206050809004080609020Percentage of respondentsNote:Onlyrespondentswhoreportedplannedorimplementedactionsareincluded.Consumer education(N=110)
325、Prohibitions/restrictions on high-risk activities(N=71)Stricter licensing requirements(N=56)Increased enforcement action for breaches(N=57)Development/implementation of new regulatory frameworks(N=93)Deployment of social media monitoring suptech applications(N=55)Deployment of chatbot suptech applic
326、ations(N=57)Deployment of sentiment analysis suptech applications(N=55)Provision of consumer-focused educational resources(N=91)Increased supervisory resources for onsite examinations(N=82)Increased supervisory resources for offsite monitoring(N=82)Development/implementation of FCP(N=79)Deployment o
327、f other suptech applications(N=63)59%66%66%60%75%52%49%25%18%46%34%29%41%34%40%48%71%82%34%25%51%54%66%87%75%Implemented Planned13%465.The landscape of digital regulatory and supervisory infrastructure 5.The landscape of digital regulatory and supervisory infrastructure475.The landscape of digital r
328、egulatory and supervisory infrastructureThepreviouschaptersoutlinedhowtherapidtransformationtowardthedigitalizationoffinancialproducts and services,and the complex ecosystems offintechandDFSmarketsrequirefinancialauthorities to adapt their approaches to regulation and supervision.The effective regul
329、ation,supervision,and oversight offinancialmarketsrequiredigitalinfrastructurethatprovidesregulatorsandsupervisorswiththe data and tools they need to carry out their functions.Organizations,including the World Bank,haveidentifiedthatthefullpotentialofdigitaldevelopmentcannotberealizedwithouta range
330、of digital infrastructure,including digital financialservicesanddigitalidentification(WorldBank,2019).Digitalinfrastructureisdefinedasthedigital technologies that provide the foundation for an organizations information technology and operation(World Bank,2019).In this context,digital regulatory and
331、supervisory infrastructure(DRSI)referstosystemsthatelectronically collect,process,and transmit informationtohelpfinancialauthoritieseffectivelyregulateandsupervisethefinancialsectorincluding,butnotlimitedtodigitalfinancialservices.DRSIprovidesfinancialauthoritieswithdataandtools to enable them to ca
332、rry out their functions.Forexample,DRSIcanincludefoundationaldata-gathering applications needed for the development of suptech initiatives,or infrastructure deployed byafinancialauthoritytoenabledigitalregulatoryreporting.DRSIcanalsoincludetheanalysisofdatato inform regulatory and supervisory action
333、s.ThereisarelationshipbetweensuptechandDSRI.Suptechistheuseofinnovativetechnologyby supervisory agencies to support supervision(BIS,2018),whileDRSIcanbeseenasbothaprerequisite for developing suptech initiatives and also as comprising initiatives that can be consideredsuptech.However,DRSIisbroaderthansuptech and includes other infrastructure used by regulators.This chapter evaluates the different l