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Blog: Helping to level the playing field for regulators - Introducing the Commonwealth Fintech Policy Toolkit

7 October 2019
By David L. Shrier, Consultant and Project Lead for Commonwealth Fintech Toolkit and Managing Director of Visionary Future

The blistering pace of innovation in financial services has seen the emergence, in the past two decades, of an array of new technologies deployed into the market – and new companies using those technologies – in more than a hundred countries around the globe. Artificial intelligence, blockchain, big data/analytics and other disruptive technologies have been changing the face of banking. New threats have emerged as well as cybercriminals have begun launching global attacks in dozens of countries simultaneously.

The rates of adoption of these technologies has often outstripped the speed with which government policy can effectively be formulated and implemented in a considered fashion that avoids deleterious consequences.

How can the central banks, and more broadly the governments of the Commonwealth nations, respond to fintech disruption?

At the 2018 Commonwealth Central Bank Governors (CCBG) meeting, members endorsed the development of a Commonwealth fintech ‘toolkit’.  Central bank governors expressed demand for improved technical guidance regarding the implementation of fintech activities. This is an area many member states are grappling with and, whilst some are more advanced in this area than others, central bank governors noted that sharing of lessons learnt would be extremely useful for future action in this area.

The Commonwealth Secretariat has engaged a team of fintech experts, anchored at the Saïd Business School, University of Oxford, to address this need. By November the Commonwealth Fintech Policy Toolkit will be available to help member nations with a better understanding of and more tools for taking action around fintech policy.

What does the toolkit contain?

  • Tech topics: We identified six major tech areas where it would be useful to provide a simple, plain-language briefing tailored for a general audience (i.e. non-technical) so that the busy regulator or policymaker could have a rapid understanding of key technologies and trends.
  • Understanding policy interventions: We reviewed a few example policy outcomes (e.g., greater financial inclusion) and provide a discussion of how disruptive technologies interact with, and can enable, different policy objectives.
  • Case studies:  Select Commonwealth countries provided case studies of specific policy interventions they conducted, to help illustrate some of the principles of the Toolkit in terms of how they actually play out in practice.
  • Nation considerations: We provided some discussion of the specific needs of small nations versus large nations, and certain regional considerations around the globe, to help with localizing the Toolkit to a particular country’s needs.

This initial toolkit provides a foundation and the beginnings of a multilateral discussion around how technology disruption in financial services can be addressed by regulators and policymakers. Our hope is that the toolkit will become a living, dynamic resource, that will be updated regularly and will create a forum for Commonwealth member nations to share both their own experiences and insights, as well as pose questions to their peers to foster collaborative solutions.

As well, there is an opportunity to facilitate coordination and standards around critical areas within fintech, such as digital identity and how it relates to know-your customer (KYC) and countering the financing of terrorism (CFT) regulations across borders.

The Commonwealth contains three of the top five fintech hubs in the world, and a number of highly progressive central banks and finance ministries that are bringing the advantages that fintech offers to ever-increasing numbers of their respective populations.  The Commonwealth Fintech Policy Toolkit looks to assist with and augment those efforts.