Overview
Promoting and maintaining fair competition in the financial sector is essential to assure efficiency, quality, access and innovation in financial services. Digital financial services (DFS) rely on digital technologies for their delivery and use by end users and include payments, credit and savings, among others. DFS are both actively and passively connected to competition, while holding significant potential to enhance financial inclusion by extending access to underserved individuals and communities. A notable characteristic of DFS is their persistent mutability, which demands from authorities a wider breadth when assessing competitive aspects related to the topic. Its dynamic nature also presents a challenge regarding which regulatory approach to take: as financial innovation speeds up, the appropriate timing to move from a passive posture to a more engaging one becomes shorter, demanding intense attention to the development of new services and changes to market structure. Authorities also strife with the choice of intervention method that preserves competition while minimizing innovation curtailing, namely remedies, interim measures or ex ante regulation1. Beyond competition, ensuring that DFS also promote inclusive access can amplify both economic opportunities and other positive spillovers on societies.
1. In competition law, ex ante regulation refers to regulatory measures implemented before a specific damaging event, practice or activity occurs.
Regulatory Approach to DFS
Barriers to competition
Competition issues in emerging DFS
Remedies
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Acknowledgements
The outline, research and drafting of this topic has been done by Marcel Beer Kremnitzer, Consultant, World Bank.
The content has been reviewed by Harish Natarajan, Fredesvinda Fatima Montes, Maria Teresa Chimienti, Moses Musantu, Rishika Kashyap (World Bank) and Ariadne Plaitakis and Stefan Staschen (Gates Foundation).
