INSIGHTS

Balancing Innovation & Regulation

09/01/2023 | Insights by Elevandi and Smartkarma

Striking the right balance between regulation and facilitation has only become more challenging with the advent of deeply integrated financial technologies. This does not take away from the very real potential benefits these technologies bring to the region, especially in terms of democratizing access to financial markets and solutions for the economically underprivileged. Research done by Smartkarma and insights from the FinTech Regulation track of the Singapore FinTech Festival 2022 organized by Elevandi, have culminated in this report highlighting the various pathways through which financial technologies can be guided along into realising its potential.

Promising, innovative, and disruptive technology promises faster and more secure payment and transaction channels than before but key challenges around standardisation and interoperability exist, especially in the case of Wholesale Central Bank Digital Currencies. Furthermore, expanding these channels into regional microcosms will require these technologies to address the necessity of localisation along with the standardization requirements to enable rapid communication and facilitation. Lapses and/or premature solutions here run the risk of discouraging adoption. This ties into the need to educate future market participants and consumers on new systems while simultaneously using older systems as the world switches over. These scenarios bring forth some outsized risks for consumers and investors that will undoubtedly require an increasingly metamorphic governance system that can dynamically adapt to cutting edge technologies as they scale.

However, it is exactly this interplay that will push the envelope for regional economies as an increasing proportion of their population gains reliable access to financial markets and solutions. FinTech has the potential to be the conduit through which not only economic solutions, but also expansions are undertaken. While the journey is never-ending and daunting, it is also morally necessary to undertake given the potentially outsized impact this access can have at lower socio-economic levels of society. Read the full report by clicking the button above to download.

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