Fintech-the application of digital technology to financial services-is reshaping the

future of finance. Digital technologies are revolutionizing payments, lending, investment,

insurance, and other financial products and services-and the COVID-19 pandemic has

accelerated this process. Digitalization of financial services and money is helping to

bridge gaps in access to financial services for households and firms and is promoting

economic development. Improved access to basic financial services translates into

better firm productivity and growth for micro and small businesses, as well as higher

incomes and resilience to improve the lives of the poor. Technology can lower

transaction costs by overcoming geographical access barriers; increasing the speed,

security, and transparency of transactions; and allowing for more tailored financial

services that better serve consumers, including the poor. Women can especially benefit.

Yet too many people and firms still lack access to essential financial services that could

help them thrive. It is time for policy makers to embrace fintech opportunities and

implement policies that enable and encourage safe financial innovation and adoption.

Fintech and the Future of Finance: Market and Policy Implications explores the

implications of fintech and the digital transformation of financial services for market

outcomes, on the one hand, and regulation and supervision, on the other hand-and

how these interact. The report, which provides a high-level perspective for senior

policy makers, is accompanied by notes that focus on salient issues for a more

technical audience. As the financial sector continues to transform itself, policy

trade-offs will evolve, and regulators will need to ensure that market outcomes

remain aligned with core policy objectives. Several policy implications emerge.

1.Manage risks, while fostering beneficial innovation and competition.

2.Broaden monitoring horizons and reassess regulatory perimeters.

3.Review regulatory, supervisory, and oversight frameworks.

4.Be mindful of evolving policy trade-offs as fintech adoption deepens.

5.Monitor market structure and conduct to maintain competition.

6.Modernize and open financial infrastructures.

7.Ensure public money remains fit for the digital world.

8.Pursue strong cross-border coordination and sharing of information

and best practices.