In the APAC region, regulatory authorities have reportedly been working on frameworks and guidelines in order take account of various products and services that are being launched due to ongoing Fintech innovation and the rise of emerging technologies.
However, with the COVID crisis significantly accelerating the adoption of all-digital financial services, regulatory authorities have decided to move Fintech services up in their priority list, responding to the key trend with several updated measures. This, according to a study carried out by the Cambridge Centre for Alternative Finance (CCAF), which is an established research institute that’s part of the Cambridge Judge Business School of the University of Cambridge in the UK.
The Fintech Regulation in Asia Pacific (APAC) report looks at how regulatory authorities in the Asia-Pacific region have been responding to the opportunities and obstacles associated with Fintech and digital financial services via ongoing regulatory changes and key processes, as well as innovation projects.
The research study aims to draw on data from surveys that had been issued to several regulators and includes a qualitative review of various regulatory guidelines, as they relate to or apply to Fintech-related activities (in 20 sampled jurisdictions across the Asia-Pacific region).
It’s notably the third in a series of studies that look into the regional Fintech-focused regulatory frameworks and follows on from other reports for the MENA region.
As noted in the extensive report, the COVID outbreak has accelerated the ongoing adoption of Fintech solutions in the Asia Pacific area.
In response to these developments, regulatory authorities have increased the regulatory priority of this fast-evolving industry, and also introduced various measures, which are sharply focusing on ensuring economic relief (50%), cybersecurity (50%), customer onboarding and due diligence (44%), and business continuity (44%).
While examining various regulatory innovation initiatives, the research study revealed that there’s a considerable increase in regulatory sandboxes, innovation offices, and even Regtech and Suptech initiatives this year, especially when compared to the previous mapping carried out by CCAF back in 2019.
In 2019, there were reportedly only 13 regulatory sandboxes that had been identified as operational in the Asia-Pacific.
As of this year, 25 jurisdictions had one (or more) operational regulatory sandbox. And 11% of respondents noted having established a regulatory sandbox during the COVID-19 crisis, meanwhile, 37% stated that they had accelerated their sandbox initiative. This suggests that the Coronavirus outbreak has served as a major catalyst in the formation of regulatory sandboxes.
Notably, the number of jurisdictions with innovation offices currently in place surged from around 9 in 2019 to 16 this year. And around 40% of sampled APAC jurisdictions that had responded to the survey noted that the Coronavirus outbreak had significantly accelerated their innovation office initiatives.
As of Regtech and Suptech, the study revealed that the number of such projects has nearly doubled during the past few years, increasing from around 8 projects back in 2019 to about 15 at present.
While examining Fintech-focused regulatory guidelines that are now place, the research findings suggest that the virtual payments, digital money and remittances ecosystems have the most extensive coverage in the APAC region, with over 80% of sampled jurisdictions in the area having regulatory guidelines in place.
Meanwhile, equity crowdfunding and P2P lending are other extensively-covered areas, with around 78% and 50% of sampled jurisdictions in Asia-Pacific, respectively, having appropriate frameworks firmly established.
There are also 4 jurisdictions that now intend to launch more frameworks across Fintech verticals:
For instance, Pakistan is looking into offering a peer-to-peer lending framework, and Fiji intends to provide an equity crowdfunding framework.
Notably, Nepal plans to offer a remittance framework, and the Marshall Islands are reportedly planning to establish frameworks focused on payments and electronic money.
As noted in the update, Open Banking is yet another fast-growing trend that regulatory authorities across the area are looking into.
Australia, Singapore, Hong Kong, India, and Japan have been identified as being among the seven nations in Asia-Pacific with an open banking framework .
Meanwhile, China, Indonesia, Malaysia, the Philippines, and Thailand are the seven jurisdictions planning to launch one in the foreseeable future.